The Young, the Old, and the Restless: Demographics and Business Cycle Volatility

By Nir Jaimovich, Henry E. Siu. 2009

264 citations recorded by the source corpus.

We investigate the consequences of demographic change for business cycle analysis. We find that changes in the age composition of the labor force account for a significant fraction of the variation in business cycle volatility observed in the U.S. and other G7 economies. During the postwar period, these countries experienced dramatic demographic change, although details regarding extent and timing differ from place to place. Using panel-data methods, we exploit this variation to show that the age composition of the workforce has a large and statistically significant effect on cyclical volatility. We conclude by relating these findings to the recent decline in U.S. business cycle volatility. Using both simple accounting exercises and a quantitative general equilibrium model, we find that demographic change accounts for a significant part of this moderation.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/10a1f784fbb85006ce25a1bc7bca221c7c4f55f3

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In Economics and Econometrics

Citations in the corpus

Moving Back Home: Insurance against Labor Market Risk (2012, background): “…with a high aggregate labor elasticity of young workers, thus addressing a recent literature that notes that labor market fluctuations at business cycle frequencies are disproportionately large for this group compared with older workers (RiosRull 1996; Gomme et al. 2004; Jaimovich and Siu 2009).”
Demographic Structure and Macroeconomic Trends (2019, background): “As our estimation results point out, as well as results from the literature of demographics and productivity and innovation (see Jones (2010) and Feyrer (2008)) and demographics and entrepreneurship (see Liang, Wang, and Lazear (2014)), young and middle age workers are relatively more important in t”
Really Uncertain Business Cycles (2012, unknown): “See, for example, Leahy and Whited (1996), Schwert (1989), Bloom, Bond and Van Reenen (2007) and Panousi and Papanikolaou (2011) who all use firm daily stock-returns volatility as an empirical measure of firm uncertainty.”
Has the Fed Been a Failure (2012, unknown): “…and Schuh (2005), Dynan, Elmendorf, and Sichel (2006), Sims and Zha (2006), Arias, Hansen, and Ohanian (2007), Leduc and Sill (2007), Davis and Kahn (2008), Jaimovich and Siu (2009), Liu, Waggoner, and Zha (2009), Fernández-Vallaverde, Guerrón-Quintana, and Rubio-Ramirez (2010), and Moro (2010).”
Gone with the Headwinds: Global Productivity (2017, background): “27 See Aiyar, Ebeke and Shao (2016), Feyrer (2007), Jaimovich and Siu (2009), and Wong (2007) for previous findings on the link between aging and productivity.”