The Aging of the Baby Boomers: Demographics and Propagation of Tax Shocks
By: Ferraro, Domenico and Fiori, Giuseppe
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Material type: 
BookPublisher: American Economic Journal Macroeconomic Description: 12(2), Apr, 2020: p.167-193.Subject(s): Personal Income, Taxes and Subsidies
In:
American Economic Journal MacroeconomicSummary: We study how the changing demographic composition of the US labor force has affected the response of the unemployment rate to marginal tax rate shocks. Using narratively identified tax changes as proxies for structural shocks, we establish that the responsiveness of the unemployment rates to tax changes varies significantly across age groups: the unemployment rate response of the young is nearly twice as large as that of the old. This heterogeneity is the channel through which shifts in the age composition of the labor force impact the response of the unemployment rate to tax cuts. We find that the aging of the baby boomers considerably reduces the effects of tax cuts on aggregate unemployment. – Reproduced
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Articles
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Indian Institute of Public Administration | 12(2), Apr, 2020: p.167-193 | Available | AR124552 |
We study how the changing demographic composition of the US labor force has affected the response of the unemployment rate to marginal tax rate shocks. Using narratively identified tax changes as proxies for structural shocks, we establish that the responsiveness of the unemployment rates to tax changes varies significantly across age groups: the unemployment rate response of the young is nearly twice as large as that of the old. This heterogeneity is the channel through which shifts in the age composition of the labor force impact the response of the unemployment rate to tax cuts. We find that the aging of the baby boomers considerably reduces the effects of tax cuts on aggregate unemployment. – Reproduced
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