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

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  • Margherita Borella
  • Mariacristina De Nardi
  • Fang Yang

Abstract

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.

Suggested Citation

  • Margherita Borella & Mariacristina De Nardi & Fang Yang, 2019. "The Lost Ones: The Opportunities and Outcomes of Non-College-Educated Americans Born in the 1960s," Opportunity and Inclusive Growth Institute Working Papers 19, Federal Reserve Bank of Minneapolis.
    • Handle: RePEc:fip:fedmoi:0019
    DOI: 10.21034/iwp.19
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    Cited by:

    1. Richard Blundell & James P. Ziliak & Hugo Lopez, 2023. "Labour market inequality and the changing life cycle profile of male and female wages," IFS Working Papers W23/16, Institute for Fiscal Studies.
    2. Greg Kaplan, 2019. "Comment on "The Lost Ones: The Opportunities and Outcomes of Non-College-Educated Americans Born in the 1960s"," NBER Chapters, in: NBER Macroeconomics Annual 2019, volume 34, pages 127-136, National Bureau of Economic Research, Inc.
    3. Schwandt, Hannes & von Wachter, Till, 2020. "Socioeconomic Decline and Death: Midlife Impacts of Graduating in a Recession," CEPR Discussion Papers 14325, C.E.P.R. Discussion Papers.
    4. Nicolas A. Roys & Christopher R. Taber, 2019. "Skill Prices, Occupations, and Changes in the Wage Structure for Low Skilled Men," NBER Working Papers 26453, National Bureau of Economic Research, Inc.
    5. Hannes Schwandt & Till M. von Wachter, 2020. "Socio-Economic Decline and Death: The Life-Cycle Impacts of Recessions for Labor Market Entrants," NBER Working Papers 26638, National Bureau of Economic Research, Inc.

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    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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