← volver

2011 Documento de Trabajo #284

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.

Alexandre Janiak
Paulo Santos Monteiro