The wage disparity between younger and older workers in high-income countries has been steadily increasing over the past few decades. In the United States, the pay gap between workers aged 55 and over and those under 35 has surged by 61% in the last four decades. Similarly, in Italy, the probability of young workers reaching the top of the pay scale has dropped by more than 30%Â since 1985, while it has risen by over 30% for older workers.
A recent study published by the National Bureau of Economic Research (NBER) suggests that this issue is likely to worsen in the coming years. As older employees remain in their positions for longer periods, younger workers are increasingly denied access to higher-paying roles and are forced to start at lower points on the pay scale. Moreover, the proportion of companies facing these dynamics is expected to grow over time.
The global population is aging rapidly, with the World Health Organization projecting that the number of people aged 60 and above will double by 2050. This demographic shift, coupled with declining economic growth, is expected to further exacerbate the age pay gap. The NBER study found that the negative spillovers on younger workers' careers are more pronounced in slower-growing, older, and larger firms, as well as in firms with higher average wages. Additionally, younger employees are becoming less likely to secure positions in higher-paying firms, as the share of older workers in these companies continues to rise disproportionately over time.