Estimating the Effect of the Age Distribution on Cyclical Output Volatility Across the United States
26 Pages Posted: 24 Dec 2013
Date Written: June 2012
I exploit the variation in demographic change across the United States to estimate the relationship between the age distribution in the population and the magnitude of cyclical output volatility. According to panel regression estimates the relative supply of young workers, or youth share, has a statistically significant effect on the volatility of state-by-state gross domestic product. Moreover, changes to the age distribution can account for up to 58% of the recent reduction in business cycle fluctuations, indicating a critical link between the youth share and output volatility.
Keywords: Business Cycles, Demographics
JEL Classification: E32, J10
Suggested Citation: Suggested Citation