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Title: Economic Uncertainty’s Impact on Aggregate Employment Fluctuations: Estimating the Importance of the Population’s Age Distribution

Citation Type: Miscellaneous

Publication Year: 2023

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Abstract: This paper provides evidence that the economic impact of changes in aggregate uncertainty depends on the population’s age distribution. In particular, the volatility in employment due to uncertainty is lower in US states that have a higher population of prime-aged workers. This finding comes from a series of regressions using a quarterly panel of state data from 2000 to 2017. To address potential endogeneity, the current age distribution is instrumented by past birth rates, and statelevel uncertainty is instrumented by national uncertainty. The regression estimates indicate that the reduction in employment volatility within states with a higher share of prime-age workers is quantitatively large. The results are robust across a battery of approaches, including using alternative variable definitions and model specifications, analyzing a host of state-level controls, using local projections to examine the dynamics, and accounting for the role of labor fluctuations in job losses and participation volatility

Url: https://www.aeaweb.org/conference/2024/program/paper/KFQiGB4d

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Authors: Zhao, Linli

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Data Collections: IPUMS CPS

Topics: Fertility and Mortality, Labor Force and Occupational Structure

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