Aging of the Baby Boomers: Demographics and Propagation of Tax Shocks

Giuseppe Fiori and Domenico Ferraro

No 359, 2016 Meeting Papers from Society for Economic Dynamics

Abstract: We investigate the consequences of demographic change for the effects of tax cuts in the United States over the post-WWII period. Using narratively identified tax changes as proxies for structural shocks, we establish that the responsiveness of unemployment rates to tax changes largely varies across age groups: the unemployment rate response of the young is nearly twice as large as that of prime-age workers. Such heterogeneity is the channel through which shifts in the age composition of the labor force impact the response of the aggregate U.S. unemployment rate to tax cuts. We find that the aging of the Baby Boomers considerably reduces the effects of tax cuts on unemployment.

Date: 2016
New Economics Papers: this item is included in nep-age, nep-cse, nep-pbe and nep-pub
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Journal Article: The Aging of the Baby Boomers: Demographics and Propagation of Tax Shocks (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed016:359

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