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Towards a quantitative theory of automatic stabilizers: the role of demographics

  • Alexandre Janiak
  • Paulo Santos Monteiro

    ()

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.

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File URL: http://www.dii.uchile.cl/~cea/sitedev/cea/www/download.php?file=documentos_trabajo/ASOCFILE120111109153514.pdf
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Paper provided by Centro de Economía Aplicada, Universidad de Chile in its series Documentos de Trabajo with number 284.

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Date of creation: 2011
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Handle: RePEc:edj:ceauch:284
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