For the first time in history, the Earth has more people over the age of 65 than under the age of five. The world’s greying is inevitable. Ageing slows growth in several ways. But the biggest hit to growth comes from weakening productivity.

Why are older economies less productive? The answer is not, as one might suppose, that older workers are. Though some capabilities, notably physical ones, deteriorate with age, the overall effect is not dramatic. A study of Germany’s manufacturing sector published in 2016 failed to detect a drop-off in productivity in workers up to the age of 60. Companies can tweak employees’ roles as they get older in order to make best use of the advantages of age, such as extensive experience and professional connections.

Furthermore, if weak productivity growth was caused by older workers producing less, pay patterns should reflect that. Wages would tend to rise at the beginning of a career and fall towards its end. But that is not what usually happens. Rather, according to a recent paper by economists at Moody’s Analytics, a consultancy, wages are lower for everyone in companies with lots of older workers. It is not older workers’ falling productivity that seems to hold back the economy, but their influence on those around them.

How this influence makes itself felt is unclear. But the authors suggest that companies with more older workers might be less eager to embrace new technologies. That might be because they are reluctant to make investments that would require employees to be retrained, given the shorter period over which they could hope to make a return on that training for those near the end of their careers. Or older bosses might be to blame. Research indicates that younger managers are more likely to adopt new technologies than are older ones. This may seem obvious: older people’s greater aversion to new technology is a stereotype. And at least anecdotally, greying industries do seem more unwilling to change.

If the evidence suggested that ageing economies struggled primarily because of slow-growing labour forces, it would make sense to focus policy efforts on keeping people in work longer—by raising retirement ages, for example. But if, as seems to be the case, reticence to embrace new technologies is a bigger issue, other goals should take priority—in particular, boosting competition. The benefits of breaking up powerful firms and increasing competition might be even bigger than thought, if conservative old firms are thereby spurred to make better use of newer technologies.

38. Why are companies with more older workers not willing to adopt new technologies?

[D] Investing in retraining senior workers may not bring a return in a short term.

40. According to Paragraph 5, the productivity of ageing economies can be increased by ______.

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