Aging, the Great Moderation and Business-Cycle Volatility in a Life-Cycle Model

Stefan Rohrbacher, Burkhard Heer and Christian Scharrer

VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy from Verein für Socialpolitik / German Economic Association

Abstract: According to empirical studies, the life cycle of labor supply volatility exhibits a U-shaped pattern. This may lead to the conclusion that demographic change induces a drop in output volatility. We present an overlapping generations model that replicates the empirically observed pattern and study the impact of demographic transition on output volatility. We find that the change in age-composition itself has only a marginal influence on output volatility as the mitigating effect of lower labor supply volatility is compensated by higher labor supply. Instead, the driving force behind the Great Moderation in our model is the downward shift of the age-specific labor supply volatility curve.

JEL-codes: C68 E32 J10 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-age, nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Journal Article: AGING, THE GREAT MODERATION, AND BUSINESS-CYCLE VOLATILITY IN A LIFE-CYCLE MODEL (2017)
Working Paper: Aging, the Great Moderation and Business-Cycle Volatility in a Life-Cycle Model (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc14:100564

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