American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
The Young, the Old, and the Restless: Demographics and Business Cycle Volatility
American Economic Review
vol. 99,
no. 3, June 2009
(pp. 804–26)
Abstract
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 cyclical volatility observed in the G7. Since World War II, these countries have experienced dramatic demographic changes, although details regarding timing and nature differ across countries. We exploit this variation to show that the workforce age composition has a large and significant effect on cyclical volatility. We relate our results to the recent decline in US macroeconomic volatility, finding that demographic change accounts for approximately one-fifth to one-third of this moderation. (JEL E32, J11)Citation
Jaimovich, Nir, and Henry E. Siu. 2009. "The Young, the Old, and the Restless: Demographics and Business Cycle Volatility." American Economic Review, 99 (3): 804–26. DOI: 10.1257/aer.99.3.804Additional Materials
JEL Classification
- E32 Business Fluctuations; Cycles
- J11 Demographic Trends and Forecasts; General Migration