The fraction of the labor force under the age of 35, or youth share, has been correlated with cyclical GDP volatility over the past several decades. The youth share and business cycle fluctuations were high during the 1970's. Then, as the population aged, output volatility declined. I develop an...

The cyclical volatility of U.S. gross domestic product suddenly declined during the early 1980's and remained low for over 20 years. I develop a labor search model with worker heterogeneity and match-specific costs to show how an increase in the supply of high-skill workers can contribute to a...