The Impact of Young Workers on the Aggregate Labor Market
An increase in the share of youth in the working age population of one state or region relative to the rest of the United States causes a sharp reduction in that state's relative unemployment rate and a modest increase in its labor force participation rate. This is inconsistent with many theories of the labor market, but can be easily explained by a model of frictional unemployment with on-the-job search. The theory makes strong predictions regarding the behavior of wages which are shown to be consistent with the data. The paper also reconciles its findings with an existing body of apparently contradictory empirical evidence.
Volume (Year): 116 (2001)
Issue (Month): 3 ()
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- Steven J. Davis & Prakash Lougani & Ramamohan Mahidhara, 1997.
"Regional Labor Fluctuations: Oil Shocks, Military Spending, and Other Driving Forces,"
JCPR Working Papers
4, Northwestern University/University of Chicago Joint Center for Poverty Research.
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- Sanders Korenman & David Neumark, 2000. "Cohort Crowding and Youth Labor Markets (A Cross-National Analysis)," NBER Chapters,in: Youth Employment and Joblessness in Advanced Countries, pages 57-106 National Bureau of Economic Research, Inc.
- Sanders Korenman & David Neumark, 1997. "Cohort Crowding and Youth Labor Markets: A Cross-National Analysis," NBER Working Papers 6031, National Bureau of Economic Research, Inc.
- Oliver Jean Blanchard & Peter Diamond, 1989. "The Beveridge Curve," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(1), pages 1-76.
- Robert J. Gordon, 1981. "Inflation, Flexible Exchange Rates, and the Natural Rate of Unemployment," NBER Working Papers 0708, National Bureau of Economic Research, Inc. Full references (including those not matched with items on IDEAS)
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