Labor force heterogeneity: implications for the relation between aggregate volatility and government size
AbstractThere is substantial evidence of a negative correlation between government size and output volatility. We put forward the hypothesis that large governments stabilize output fluctuations because in economies with high tax rates the share of total market hours supplied by demographic groups exhibiting a more volatile labor supply is lower. This hypothesis is motivated by the observation that employment volatility is larger for young workers than for prime aged workers, and that the share of hours worked by the young workers is lower in countries with high tax rates. This paper illustrates these empirical facts and assesses in a calibrated model their quantitative importance for the relation between government size and macroeconomic stability.
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Bibliographic InfoPaper provided by Centro de Economía Aplicada, Universidad de Chile in its series Documentos de Trabajo with number 272.
Date of creation: 2010
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-01-16 (All new papers)
- NEP-DGE-2011-01-16 (Dynamic General Equilibrium)
- NEP-LAB-2011-01-16 (Labour Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Alejandra Mizala & Pilar Romaguera & Sebastian Gallegos, 2010. "Public-Private Wage Gap In Latin America (1999-2007): A Matching Approach," Documentos de Trabajo 268, Centro de Economía Aplicada, Universidad de Chile.
- Sekyu Choi & Alexandre Janiak & Benjamín Villena-Roldán, 2011.
"Unemployment, Participation and Worker Flows Over the Life Cycle,"
Documentos de Trabajo
278, Centro de Economía Aplicada, Universidad de Chile.
- Sekyu Choi & Alexandre Janiak & Benjamín Villena-Roldán, 2012. "Unemployment, Participation and Worker Flows Over the Life-Cycle," Working Papers 617, Barcelona Graduate School of Economics.
- Benjamin Villena-Roldan & Alexandre Janiak & Sekyu Choi, 2011. "Unemployment, Participation and Worker Flows over the Life Cycle," 2011 Meeting Papers 602, Society for Economic Dynamics.
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