Workers are getting older and younger people earn less and less

The average age of the workforce in Italy has risen from 35.8 years in 1985 to 42.7 years in 2019. But the consequence of a progressive aging of workers has an unexpected implication: «the greater supply of older workers has not curbed the growth of their wages relative to younger workers. Indeed, the wage gap by age has widened considerably in favor of older workers» which in Italy rose between 1985-2019 by 19%.

A study attached to the latest INPS Annual Report, signed by Nicola Bianchi (Northwestern Kellogg School of Management) and Matteo Paradisi (Einaudi Institute for Economics and Finance).

A wage gap that we also share, albeit in less pronounced terms, with other countries: the wage gap has grown by 10% in favor of older workers in the United States, by 11% in the United Kingdom (1997-2019) and by 17% in Denmark (1997-2019). But even Germany has a “pay gap” of these levels. Indeed, considering a large sample of both Italian and German workers and companies, the study shows that “the widening of the wage gap by age is associated with a slowdown in the careers of younger workers, while those of older workers have improved”.

From 1985 to 2019, in fact, the Report continues, “the probability that younger workers were in the top quartile of the wage distribution decreased by 34%, while the same probability, for older workers, increased by 16%”. Furthermore, the likelihood of younger workers holding managerial positions “decreased by two-thirds between 1985 and 2019, while it increased by 87% among older workers”.