The Aging of the Baby Boomers: Demographics and Propagation of Tax Shocks

83 Pages Posted: 6 Oct 2016

See all articles by Domenico Ferraro

Domenico Ferraro

Arizona State University (ASU) - Economics Department

Giuseppe Fiori

Board of Governors of the Federal Reserve System

Date Written: September 7, 2016

Abstract

We investigate the consequences of demographic change for the effects of tax cuts in the United States over the post-WWII period. Using narratively identified tax changes as proxies for structural shocks, we establish that the responsiveness of unemployment rates to tax changes largely varies across age groups: the unemployment rate response of the young is nearly twice as large as that of prime-age workers. Such heterogeneity is the channel through which shifts in the age composition of the labor force impact the response of the aggregate U.S. unemployment rate to tax cuts. We find that the aging of the Baby Boomers reduces the effects of tax cuts on aggregate unemployment by nearly fifty percent.

Keywords: Taxes; Demographics; Aging; Baby Boomers; Unemployment; Participation

JEL Classification: E24; E62; J11

Suggested Citation

Ferraro, Domenico and Fiori, Giuseppe, The Aging of the Baby Boomers: Demographics and Propagation of Tax Shocks (September 7, 2016). Available at SSRN: https://ssrn.com/abstract=2848156 or http://dx.doi.org/10.2139/ssrn.2848156

Domenico Ferraro (Contact Author)

Arizona State University (ASU) - Economics Department ( email )

Tempe, AZ 85287-3806
United States

Giuseppe Fiori

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
33
Abstract Views
377
PlumX Metrics