Who is compressing the “dividends” of employees? Research on the impact of population aging on employee treatment

The increasing population aging has significantly altered the labor market and may consequently affect human resource management within organizations. Specifically, we investigate how this trend affects firms' employee treatment. Using panel data from the Chinese A-share firms listed on the Shanghai and Shenzhen stock exchanges between 2007 and 2022, we discover that an aging population significantly reduces firms' employee treatment. This trend, which is consistent with the threat-rigidity effect, is mainly driven by rising labor costs and age discrimination against older workers. Accordingly, we find that population aging results in increased costs for recruiting, training, and pension obligations. Additionally, in areas with more pronounced population aging, firms are more likely to engage in age discrimination during recruitment. We also discuss several possible governance mechanisms. We find that advancements in intelligent elderly care systems, enhancements in education, and a stronger law environment can help alleviate the rigidity effect of population aging on employee treatment. Our research is crucial for understanding the corporate social responsibility (CSR) towards employees in an aging society and for developing effective policies to address demographic changes.