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Title: Hard Work, Nonemployment, and the Wealth-Age Profile: Evidence of a Life-Cycle Strategy in the United States during the Nineteenth Century

Citation Type: Conference Paper

Publication Year: 2011

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Abstract: I examine a series of surveys of (primarily) industrial workers taken in the late-nineteenth century United States to support the proposition that life-cycle saving was common and that, as a consequence, saving rates of the working class were surprisingly high. The surveys have detailed information on income, wage rates, occupation,unemployment, self-reported productivity, savings, and also some limited information on asset holdings. Thereare also retrospective questions that allow me to examine how things changed for individual workers over time.Saving behavior in this era seems to have been motivated by the challenges that industrial workers of the time facedas they aged: declining incomes, more frequent and longer episodes of unemployment, and voluntary or unavoidabledownward occupational mobility. While full retirement was also common for the very old, accumulated assets wereprimarily a protection against falling income and enforced idleness at a time when many elderly could not dependupon their grown children to support them. I supplement the worker surveys with evidence of wealth holdings fromthe public-use samples of the 1870 U.S. Census of Wealth material previously under-appreciated by economichistorians. The information collected has, as should be expected, some deficiencies, but with due attention to thequality of the data and the conceptual problems that confound its interpretation, I am willing to proceed. Theconclusions challenge the findings of life-cycle skeptics such as Michael Darby, Laurence Kotlikoff, LawrenceSummers, and others.

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Authors: Sutch, Richard

Conference Name: National Bureau of Economic Research

Publisher Location: Cambridge, MA

Data Collections: IPUMS USA

Topics: Aging and Retirement, Labor Force and Occupational Structure, Other

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