Towards a quantitative theory of automatic stabilizers: the role of demographics
Employment volatility is larger for young workers than for prime aged. At the same time, in economies with high tax rates the share of total market hours supplied by the young workers is smaller. These two observations imply a negative correlation between government size (measured by the share of taxes in total output) and aggregate hours volatility. This paper assesses in a calibrated model the quantitative importance of these empirical facts to account for the relationship between government size and macroeconomic stability.
Year of publication: |
2011
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Authors: | Janiak, Alexandre ; Monteiro, Paulo Santos |
Institutions: | Centro de Economía Aplicada, Universidad de Chile |
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