Formula 1, the labour market, and individual labour productivity

What can Formula 1 teach us about individual labour productivity? This question is at the core of the study titled "The Age Productivity Gradient: Evidence from a Sample of F1 Drivers (2011)," conducted by Giovanni Pica, Dean and Full Professor at the USI Faculty of Economics, along with Fabrizio Castellucci and Mario Padula. In an interview with La Domenica del Corriere del Ticino, Pica explains how analysing drivers' performances can provide valuable insights into the functioning of the labour market and the evolution of productivity as people age.

"Formula 1 is a fascinating laboratory for studying the relationship between productivity and age, a topic of great relevance in light of the progressive ageing of the population," explains Prof. Pica. "In the case of Formula 1, unlike in the more traditional labour market context, we have access to extremely detailed and accurate data on the performance of each team member, which allows us to analyse in a unique way how individual productivity evolves with age."

The results show an inverted U-shaped trend: "Productivity increases until the age of 30-32 and then begins to decline," explains the professor. This pattern, also observed in other empirical studies, is confirmed outside the world of motor racing: "Productivity increases until the age of 30-40, then tends to decline after the age of 50." However, Pica warns that "estimating the relationship based on data relating to workers and companies remains difficult," as corporate strategies—such as hiring, innovation, and economic cycles—can influence the composition of the workforce. The context, therefore, matters as much as age. "The fit with the employer is essential as it shifts the relationship between productivity and age upwards, i.e., it raises the overall level of productivity at every age, without significantly altering the inverted U-shape."

Pica highlights how the sector and nature of employment affect the decline in productivity: "In physically demanding jobs, this decline tends to occur earlier, as seen in occupations where workers' skills become outdated quickly. However, in other fields, the decline in physical and cognitive abilities, as well as skill obsolescence, can be partially countered by the accumulation of experience and the development of established skills.” The younger generations, who are entering the labour market later, could shift the peak of productivity forward: " If this delayed entry is accompanied by the acquisition of up-to-date skills, it is likely that the productivity curve will shift forward. Nevertheless, the overall duration of this peak might be shorter, as the decline in productivity is influenced more by biological age than by the age at which individuals enter the workforce."

Another decisive factor is technology, which is evolving more rapidly today than in the past: "This accelerates the decline in productivity with age due to the faster obsolescence of skills. Today, workers must constantly update their skills and continue to train throughout their careers to counteract this phenomenon." According to Pica, the Formula 1 metaphor is particularly effective in representing the relationship between experience and adaptability: "Take, for example, two of the most important drivers of the last two decades: Lewis Hamilton and Max Verstappen. The Brit has accumulated years of experience and intuition, while the Dutchman combines natural talent and quick learning. Similarly, in the workplace, experience remains important, but in a rapidly changing environment, the speed with which new skills are acquired can make all the difference."

Pica also brings this lesson into the classroom, passing it on to his students: "In today's job market, it is no longer enough to simply get an education: it is essential to update your skills constantly. This is the only way to avoid an early decline in productivity and remain competitive in a constantly evolving environment."

The full interview with Dean Giovanni Pica, conducted by Marco Ortelli of La Domenica del Corriere del Ticino, is available by clicking here. (Italian only)