Blame it on the young
Nir Jaimovich and Henry Siu write:
We investigate the consequences of demographic change for business cycle analysis. We find that changes in the age composition of the labor force account for a significant fraction of the variation in business cycle volatility observed in the U.S. and other G7 economies. During the postwar period, these countries
experienced dramatic demographic change, although details regarding
timing and nature differ from place to place. Using panel-data methods, we exploit this variation to show that the age composition of the workforce has a large and
statistically significant effect on cyclical volatility. We conclude by
relating these findings to the recent decline in U.S. business cycle
volatility. Through simple quantitative accounting exercises, we find
that demographic change accounts for approximately one-fifth to
one-third of this moderation.
That's in the June 2009 American Economic Review (somewhat different version). One ungated earlier version is here. A later NBER version is here. The very useful PowerPoints are here.