1. Anthony Webb
Research Director, Retirement Equity Lab (ReLab)
The New School
Discussion of Understanding Earnings, Labor Supply and Retirement Decisions
Retirement Research Consortium Meeting
Washington DC
August

2. My Instructions Were to Focus on the Policy Implications. But…
Excellent paper
Great dataset
Sound methodology
Recommend you read it!

3. Key Contribution
Unlike previous models of the retirement decision, workers in this model choose how much to invest in their human capital.
Workers will respond to incentives to delay retirement by investing more in their human capital.
This investment will increase their wages and make work at older ages more attractive.
Previous research underestimates the impact on wages and labor supply of policies to encourage work at older ages.

4. Are the Differences in Predicted Responses Economically Significant?
Paper simulates the effect of changes in the Social Security program.
Some are quite radical, so I will focus on the impact of increasing the Normal Retirement Age from 65 to 67.
Investment in human capital a choice variable
Model disregards investment in human capital
Difference
Labor force participation rate (in months over lifetime)
4.9
4.1
0.8 (3 weeks)
Pre-tax lifetime income in $
$8,484
$5,235
$3,249

5. Model is Plausible for Those With Advanced Degrees
Ph.D Economists Invest in their human capital by:
Reading important new papers.
Attending conference presentations by top speakers.
Learning new datasets. 
But the model is estimated on high-school educated white males.

6. The Model: Assumptions vs. Reality
The model assumes a perfectly competitive labor market in which workers pay for investment in human capital through lower wages.
In reality:
Who pays for the investment – the employer or the employee?
How much choice does the employee have over the level of investment?
How much investment in the human capital of high-school educated older workers takes place?

7. Top 10 Jobs for High-School Educated White Males Ages 55-64
These don’t look like jobs requiring much on-going investment.
Occupation
Share of white high-school educated males ages 55-64
Driver/sales workers and truck drivers
4.9%
Managers, all other
4.3%
First-line supervisors/managers of retail sales workers
2.7%
Janitors and building cleaners
2.4%
Chief executives
Sales representatives, wholesale and manufacturing
1.8%
Laborers and freight, stock, and material movers, hand
Retail salespersons
1.6%
Carpenters
Construction laborers
Total
25.1%
Source: SCEPA calculations using 2016 Current Population Survey ASEC

8. The Role of Age Discrimination
Why are older workers not receiving training?
Is it...
An optimizing choice by workers nearing retirement?
The result of age discrimination by employers?
Dedrick and Dobbins (1991), Ghilarducci and Saad-Lessler (2012), Greller (1999), Rosen and Jerdee (1976), Van Vianen and de Pater (2011) point to age discrimination.

9. More Generally, Age Discrimination, Not Lack of Human Capital Forces Older Women Into Lower Paying Jobs
Research shows that educated older women -- compared to young women have distinct disadvantage at hiring.
Women's value in a culture of patriarchy -- of the "male gaze" -- depreciate women faster. Young women have complex value when working with men, part partner, colleague and object. That value diminishes over time.
Statistical discrimination means that once a woman ages she is assumed to inhabit the average characteristics of older women -- frailty and self- abnegation.

10. Conclusion
In theory, policies to encourage work at older ages will create a virtuous circle of higher labor force participation and higher wages.
But the effects appear to be small and not economically significant.
Relying on delayed retirement as a solution to the retirement savings crisis may condemn older Americans to life in the precariat.

11. Thank you