The Demand for Youth: Implications for the Hours Volatility Puzzle
AbstractThe employment and hours worked of young individuals fluctuate much more over the business cycle than those of prime-aged individuals. Understanding the mechanism underlying this observation is key to explaining the volatility of aggregate hours over the cycle. We argue that the joint behavior of age-specific hours and wages in the U.S. data point to differences in the cyclical characteristics of labor demand. To articulate this view, we consider a production technology displaying capital-experience complementarity. We estimate the key parameters governing the degree of complementarity and show that the model can account for the behavior of age-specific hours and wages while generating a series of aggregate hours that is nearly as volatile as output.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14697.
Date of creation: Jan 2009
Date of revision:
Publication status: published as The Demand for Youth: Explaining Age Differences in the Volatility of Hours, American Economic Review, December 2013, vol. 103, issue 7, 3022-3044 (with Henry Siu and Seth Pruitt).
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Other versions of this item:
- Nir Jaimovich & Seth Pruitt & Henry E. Siu, 2009. "The demand for youth: implications for the hours volatility puzzle," International Finance Discussion Papers 964, Board of Governors of the Federal Reserve System (U.S.).
- E0 - Macroeconomics and Monetary Economics - - General
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-01-31 (All new papers)
- NEP-BEC-2009-01-31 (Business Economics)
- NEP-DGE-2009-01-31 (Dynamic General Equilibrium)
- NEP-LAB-2009-01-31 (Labour Economics)
- NEP-MAC-2009-01-31 (Macroeconomics)
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