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Report

Stagnation in lifetime incomes: An overview of trends and potential causes

Abstract

Lifetime incomes have stagnated for the majority of American men since the cohort of workers that entered the labor market in the late 1960s. The evidence shows that those who turned age 25 after the 1960s have experienced a large decline in their starting wages relative to earlier cohorts, and did not experience faster growth in their wages over the life cycle to make up for those earlier losses, resulting in lower lifetime incomes. These trends coincided with a stagnation of educational attainment for men, as well as rising income disparities among workers with some college experience. In light of these facts, this paper presents some design considerations for human capital policies that aim to boost wage growth for younger workers by: (1) identifying promising labor market data collection practices to ensure that students are taught skills that are both valued in their local labor market and resilient to shifts in demand, and (2) providing targeted tuition subsidies for enrollment in two-year community colleges and technical colleges.

Author

F

Fatih Guvenen

Curtis L. Carlson Professor of Economics - University of Minnesota

Research Consultant - Federal Reserve Bank of Minneapolis

Research Associate - National Bureau of Economic Research

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