Age effects in Swedish local labour markets

The paper studies the effects of changes in the age structure on aggregate labour market performance using a panel of Swedish local labour markets. The methodology of Shimer (2001) is used for studying the effects of youth cohort size and is extended to include the full age distribution. The results show that young workers benefit from belonging to a large cohort. This is in line with previous results for the US. Furthermore it is shown that most of the positive effect for young workers is due to an inward shift in the Beveridge-curve even though tightness seems to increase as well. In contrast to the US experience, older workers in Sweden do not benefit from large youth cohorts. Further results show that large numbers of 50 to 60 year old workers have an adverse effect on the labour market. This is consistent with negative externalities from
well-matched individuals.

Keywords: Unemployment, cohort crowding, age structure, matching
JEL classification: J10, J21, J60