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Youth unemployment and welfare gains from eliminating business cycles — The case of Poland

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  • Acedański, Jan

Abstract

In many countries, business cycle fluctuations of unemployment rate among youth are much higher than that of other cohorts. We investigate how this life-cycle heterogeneity of unemployment risk affects welfare gains from eliminating business cycles in Poland. We use an overlapping generations version of the heterogeneous agent model with aggregate risk and borrowing constraints. We find that accounting for life-cycle heterogeneity of unemployment risk can increase the gains even by 60%. The results also show that consumption of young cohorts drops due to business cycles at least a few times more than the average for the whole population.

Suggested Citation

  • Acedański, Jan, 2016. "Youth unemployment and welfare gains from eliminating business cycles — The case of Poland," Economic Modelling, Elsevier, vol. 57(C), pages 248-262.
  • Handle: RePEc:eee:ecmode:v:57:y:2016:i:c:p:248-262
    DOI: 10.1016/j.econmod.2016.05.012
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    More about this item

    Keywords

    Business cycle; Unemployment; Overlapping generations; Welfare; Youth;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

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