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The demand for youth: implications for the hours volatility puzzle

Nir Jaimovich (), Seth Pruitt () and Henry Siu ()

No 964, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)

Abstract: The 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.

Keywords: Business cycles; Hours of labor (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-dge and nep-lab
Date: 2009, Revised 2009
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Working Paper: The Demand for Youth: Implications for the Hours Volatility Puzzle (2009) Downloads
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