Institute Working Paper 19

The Lost Ones: The Opportunities and Outcomes of Non-College-Educated Americans Born in the 1960s

Margherita Borella | Università di Torino
Mariacristina De Nardi | Opportunity and Inclusive Growth Institute Visiting Scholar, University College London, and NBER
Fang Yang | Louisiana State University

Published March 18, 2019

White, non-college-educated Americans born in the 1960s face shorter life expectancies, higher medical expenses, and lower wages per unit of human capital compared with those born in the 1940s, and men's wages declined more than women's. After documenting these changes, we use a life-cycle model of couples and singles to evaluate their effects. The drop in wages depressed the labor supply of men and increased that of women, especially in married couples. Their shorter life expectancy reduced their retirement savings but the increase in out-of-pocket medical expenses increased them by more. Welfare losses, measured as a one-time asset compensation, are 12.5%, 8%, and 7.2% of the present discounted value of earnings for single men, couples, and single women, respectively. Lower wages explain 47-58% of these losses, shorter life expectancies 25-34%, and higher medical expenses account for the rest.

DOI: https://doi.org/10.21034/iwp.19

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