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

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  • Alexandre Janiak
  • Paulo Santos Monteiro

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Abstract

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.

Suggested Citation

  • Alexandre Janiak & Paulo Santos Monteiro, 2011. "Towards a quantitative theory of automatic stabilizers: the role of demographics," Documentos de Trabajo 284, Centro de Economía Aplicada, Universidad de Chile.
  • Handle: RePEc:edj:ceauch:284
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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