Unpacking the impact of organizational age and wage diversity on firm performance

Workforce diversity in terms of age and wage is a critical challenge of increasing importance for firms. The aging population trend forces people to work longer, creating historically high levels of  workforce age diversity. At the same time, because wage is a key incentive for employees, firm wage diversity remains a pertinent concern. How does this workforce age and wage diversity affect firm performance? This is the allencompassing question guiding this project. So far, research has been dominated by competing theories predicting either positive or negative effects (i.e., synergies between age-related knowledge and motivational effects of wage differences vs. age-based value conflicts and wagerelated feelings of inequity), and empirical tests have not offered clarity either. We take four steps to unravel the double-edged swords of workforce age and wage diversity. First, we focus on the distinct distributions diversity can refer to, as they are expected to have different effects. Second, we study the role of two fundamental moderators that have been ignored in empirical testing: industry context and pay diversity legitimacy. Third, we examine the multilevel effects of workforce age and wage diversity, proposing their effects depend on firms’ work structure in teams. Fourth, we study age and wage diversity in relation with three interrelated performance dimensions, turnover, labor productivity, and firm profits, to gain a comprehensive understanding of their effects.