Old Workers, New Capital

Philippe d’Astous, Thomas Geelen and Jakub Hajda
Working Paper #20
Retirement and Savings Institute – November 2025

This paper examines the impact of workforce aging on corporate investment. Using matched employer-employee data, the authors analyze variation in the average age of new hires and show that firms hiring older workers significantly increase their capital investment. A typical increase in the average age of newly hired employees leads to a 0.3 percentage point rise in investment rates, representing a 2.6% increase relative to the sample mean. To establish causality, the authors implement a shift-share instrumental variable approach based on industry-level demographic trends and firms’ initial workforce composition. The findings are consistent with a model in which firms make optimal hiring decisions between younger and older workers, who differ in productivity and wages.