The fortunes of one's birth: Relative cohort size and the youth labor market in the United States

Using two different measures of relative cohort size - one indicating the s ize and placement of an individual's own birth cohort, and the other, the r atio of young to prime age adults in the United States in that year - it ha s been possible to isolate strong effects of the population age structure o n wages in the United States over the past thirty-three years. These effect s have been strong enough that virtually all of the observed change in the experience premium, and a substantial proportion of the changes in the coll ege wage premium, can be explained by the relative cohort size variables al one. Even changes in the amount of within-group variance in wages appear to be largely a function of changing age structure, and absolute wage levels have been strongly affected by these demographic changes, suggesting that p opulation growth can have positive effects on the economy. JEL classificati on: J21, J23, J31.