The changing opportunities and outcomes of non-college educated Americans

Margherita Borella, Fang Yang and Mariacristina De Nardi

No 206, 2019 Meeting Papers from Society for Economic Dynamics

Abstract: We show that white, non-college-educated Americans born in the 1960s face lower life expectancies and higher medical expenses compared to those born in the 1940s. In addition, men's wages for each unit of human capital declined much more than women's across these cohorts. We calibrate a life-cycle model of couples and singles to match the labor market and savings outcomes of the white, non-college-educated 1960s cohort and use it to evaluate the effects of these changes. The changes in wages depressed the labor supply of men and increased that of women, especially in married couples. The decrease in life expectancy reduced retirement savings but the increase in out-of-pocket medical expenses increased them by more. Single men experienced the largest welfare losses, requiring a one-time asset compensation corresponding to 12.5% of the present discounted value of their earnings. Single women experienced a 7.2% welfare loss. Couples had a welfare loss of 8%. Lower wages explain 47-58% of these losses, shorter life expectancies explain 25-34%, and higher medical expenses account for the rest.

Date: 2019
New Economics Papers: this item is included in nep-age, nep-dge, nep-hea and nep-his
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed019:206

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