Comment

Abstract

Individuals without a college degree in the United States have experienced a relative decline in labor market and other opportunities. This is especially the case for lower-educated white men who entered the labor market in the early 1980s and after. These trends are not exclusive to the United States; in theUnitedKingdom and elsewhere, thosewithout a college degree have fared poorly since the early 1980s. For the United States, the raw statistics point to one of the largest declines for developed economies. There has been a fall in (relative) real earnings for the low educated, especially white men. There appears to be almost no wage progression over the working life for low-educated men and women. There is strong assortativeness by wages in marriage such that the increasing labor market participation of women has not offset the growth in earnings inequality for couple households. In addition, medical costs have risen, especially in terms of social care, and perhaps most surprisingly, mortality has risen. Motivated by these trends, the authors specify a life-cycle model that includes marriage and divorce, human capital accumulation, medical expenditures, and changing life expectancy. They use data from the Panel Study of Income Dynamics and the Health and Retirement Survey to construct a sample of white, non-college-educated Americans. Sample moments are then used to estimate the model. Counterfactual simulations are then used to ask: What if the 1940s cohort of non-college-educated white Americans had experienced the wages, the medical expenses, and the mortality of the 1960s cohort? The “what if” is for labor market participation, hours, savings, and welfare. In this discussion, I first examine the trends in outcomes for these different groups over this period in the United States. I then briefly run