the demand for aging boomers robert k. triestand margarita sapozhnikov federal reserve bank of...
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The Demand for Aging Boomers
Robert K. Triest and Margarita Sapozhnikov
Federal Reserve Bank of Boston Boston College
Prepared for the NASI 18th Annual Policy Research Conference
“Older and Out of Work: Jobs and Social Insurance for a Changing Economy”
January 19-20, 2005
Washington, D.C.
• The entry of the baby boom into the labor force resulted in a large increase in the ratio of entry-level workers to more experienced workers.
• As the boomers have “matured,” the age distribution has become much flatter.
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.02
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.04
.01
.02
.03
.04
20 40 60 20 40 60 20 40 60
20 40 60 20 40 60 20 40 60
1964 1974 1984
1994 2004 2014
male female
Source: Authors' calculations
Rel
ativ
e B
irth
Co
hort
Siz
e
Age
source: authors' calculations
Figure 1Changes in the Age Distribution over Time
• The change in the age distribution differs greatly by degree of educational attainment.
• Because the boomers tended to be better educated than preceding cohorts, college educated boomers experienced more cohort crowding than did those with less education.
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.02
.03
.01
.02
.03
10 20 30 40 10 20 30 40 10 20 30 40
10 20 30 40 10 20 30 40 10 20 30 40
1964 1974 1984
1994 2004 2014
male female
Rel
ativ
e C
oho
rt S
ize
Years of Potential Labor Market Experience
source: authors' calculations
Figure 2aChanges in the Distribution of Labor Market Experience for High School Dropouts
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.05
.01
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.03
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.05
0 10 20 30 40 0 10 20 30 40 0 10 20 30 40
0 10 20 30 40 0 10 20 30 40 0 10 20 30 40
1964 1974 1984
1994 2004 2014
male female
Rel
ativ
e C
oho
rt S
ize
Years of Potential Labor Market Experience
source: authors' calculations
Figure 2bChanges in the Distribution of Labor Market Experience for High School Graduates
0.0
2.0
4.0
60
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0 10 20 30 40 0 10 20 30 40 0 10 20 30 40
0 10 20 30 40 0 10 20 30 40 0 10 20 30 40
1964 1974 1984
1994 2004 2014
male female
Rel
ativ
e C
oho
rt S
ize
Years of Potential Labor Market Experience
source: authors' calculations
Figure 2cChanges in the Distribution of Labor Market Experience for College Graduates
• Entry-level workers and more-experienced workers tend to perform different tasks and have different roles in the production process.
• As a result, the relative wages of workers with different experience levels will depend on their relative supplies.
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1.2
1.4
1.6
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1.2
1.4
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1960 1970 1980 1990 2000 1960 1970 1980 1990 2000 1960 1970 1980 1990 2000
1960 1970 1980 1990 2000 1960 1970 1980 1990 2000
less than high school high school graduate some college
college graduate post-college
for males for females
Wa
ges
of W
orke
rs W
ith 3
1-35
Ye
ars
Exp
erie
nce
Re
lativ
e to
Wo
rke
rs W
ith 6
-10
Ye
ars
of E
xper
ien
ce
Year
Source: Authors' calculations
Figure 3Changes over Time in the Experience Premium
• Regression results using Current Population Survey data from 1964 to 2004 imply that relative cohort size has substantial effects on wages for men.
• The cohort size effects are larger for college educated men than they are for high school educated men.
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.05
0 10 20 30 40
high school graduates
1940 1950
1960 1970
birth year
Re
lative
Co
ho
rt
Siz
e
Years of Potential Labor Market Experience
source: authors' calculations
Figure 4aThe Evolution of Relative Cohort Size
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.02
.03
.04
.05
0 10 20 30 40
high school graduates
1940 1950
1960 1970
birth year
Re
lative
Co
ho
rt
Siz
e
Years of Potential Labor Market Experience
source: authors' calculations
Figure 4The Evolution of Relative Cohort Size
.01
.02
.03
.04
.05
0 10 20 30 40
high school graduates
1940 1950
1960 1970
birth year
Re
lative
Co
ho
rt
Siz
e
Years of Potential Labor Market Experience
source: authors' calculations
Figure 4aThe Evolution of Relative Cohort Size
Estimated Effects of Cohort Size Relative to 1950 Birth Cohort for Male High School Graduates
Birth Year 1 10 20 301920 -1.59%1930 0.03% 1.93%1940 -0.79% 0.62% 1.59%19501960 -1.70% -2.15% -4.35%1970 0.75% 1.67%1980 2.32%
Years of Labor Market Experience
.01
.02
.03
.04
.05
0 10 20 30 40
college graduates
1940 1950
1960 1970
birth year
Re
lative
Co
ho
rt
Siz
e
Years of Potential Labor Market Experience
source: authors' calculations
Figure 4bThe Evolution of Relative Cohort Size
Estimated Effects of Cohort Size relative to 1950 Birth Cohort for Male College Graduates
Birth Year 1 10 20 301920 3.05%1930 4.05% 4.31%1940 8.74% 7.42% 6.57%19501960 11.22% 4.79% 2.04%1970 17.98% 8.59%1980 20.72%
Years of Labor Market Experience
• Changes in the experience composition of the labor force exert a powerful influence on the structure of wages.
• The entry of the boomers into the labor market was accompanied by an increase in the premium paid for labor market experience.
• This effect was partially reversed as the baby boomers progressed into middle age.