TY  - JOUR
AU  - Jaimovich,Nir
AU  - Siu,Henry E.
TI  - The Young, the Old, and the Restless: Demographics and Business Cycle Volatility
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14063
PY  - 2008
Y2  - June 2008
UR  - http://www.nber.org/papers/w14063
L1  - http://www.nber.org/papers/w14063.pdf
N1  - Author contact info:
Nir Jaimovich
Department of Economics
Duke University
213 Social Services Building
Durham, NC 27708
Tel: 919/660-1864
E-Mail: njaimo@gmail.com

Henry E. Siu
Department of Economics
University of British Columbia
1873 East Mall #997
Vancouver, BC V6T 1Z1
Canada
Tel: 604/822-2919
Fax: 604/822-5915
E-Mail: hankman@mail.ubc.ca
AB  - 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 timing and nature 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. Through simple quantitative accounting exercises, we find that demographic change accounts for approximately one-fifth to one-third of this moderation.
ER  -