Sound labor market policies require a clear understanding of how worker productivity relates to observed wage levels. Productivity can vary significantly across different age groups, educational backgrounds, and industry sectors. For instance, evaluating the appropriateness of Thailand’s new minimum wage policy necessitates examining whether the wages of low-income workers align with their productivity. Similarly, policy decisions concerning a uniform extension of the retirement age must consider whether older workers sustain productivity levels comparable to their younger counterparts. If wages exceed productivity for certain groups, particularly older workers, firms may face difficulties in continuing to employ them.

1. How to decouple wage and productivity levels at the individual levels?
2. Do productivities decline with age?