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American Economic Review Vol. 103 No. 7 2013

The Demand for Youth: Explaining Age Differences in the Volatility of Hours

Nir Jaimovich1; Seth Pruitt2; Henry Siu3

1 Department of Economics, Duke University, 213 Social Sciences Building, Durham, NC 27708-0097 and NBER. · 2 Federal Reserve Board, Division of International Finance, 20th St. and Constitution Avenue NW, Washington, DC 20551. · 3 Department of Economics, University of British Columbia, #997-1873 East Mall, Vancouver, BC V6T 1Z1, Canada, and NBER.

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Abstract

Over the business cycle young workers experience much greater volatility of hours worked than prime-aged workers. This can arise from age differences in labor supply or labor demand characteristics. To distinguish between these, we document that, for young workers, both the cyclical volatilities of hours and wages are greater than those of the prime-aged. We argue that a general class of models featuring only age-specific labor supply differences cannot reconcile these facts. We then show that a simple model featuring labor demand differences can.

DOI
10.1257/aer.103.7.3022
Volume
103
Issue
7
Pages
3022-3044
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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