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Accounting for Earnings Capacity and Worklife Expectancy

Paper Session

Saturday, Jan. 5, 2019 10:15 AM - 12:15 PM

Atlanta Marriott Marquis, International 4
Hosted By: National Association of Forensic Economics
  • Chair: A. Frank Adams III, Adams Economic Consulting

Earning Capacity in the Quantity Dimension: The State of the Science

Stephen Horner
,
Economic Consultant
Frank Slesnick
,
Bellarmine University
Michele Angerstein-Gaines
,
Economic Consultant

Abstract

Actual earnings are a function of the rate of pay, which we might consider the rate dimension, and the amount of work done, which we might consider the quantity dimension. From Horner and Slesnick (1999), “Earning capacity is the expected earnings of a worker who chooses to maximize the expectation of actual earnings.” Thus, earning capacity is also a function of these two dimensions. The purpose of the current paper is to review the relevant forensic literature that addresses the quantity dimension of earning capacity.

JEL Codes: K13 Forensic Economics; J21 Labor Force and Employment, Size, and Structure; J22 Time Allocation and Labor Supply; J26 Retirement

An Econometric Model of Worklife Expectancy and Normative Retirement

Scott Dale Gilbert
,
Southern Illinois University-Carbondale

Abstract

This paper presents an econometric model of worklife expectancy. The model inputs include normative retirement age and risk factors dealing with death, disability, unemployment, and detention. The resulting worklife estimate is representative of full-time workers who pursue their earnings capacity or potential until retirement. To describe workers who instead voluntarily take time out of the labor force, an extended model adds as inputs the chance of such voluntary exits. The models presented here incorporate features from several models in the forensic economics literature. Application to economic damages, in personal injury and wrongful death cases, illustrate the methods.

JEL Code: K13 Forensic Economics

An Overview of Refinements to the SCK Worklife Methodology

Gary R. Skoog
,
Legal Econometrics, Inc.
James E. Ciecka
,
DePaul University
Kurt V. Krueger
,
John Ward Economics

Abstract

This paper presents updated WLE estimates based on more recent data and also discusses refinements to the methodology underlying the estimates.

JEL Code: K13 Forensic Economics
Discussant(s)
William G. Brandt
,
Brandt Forensic Economics
William Rogers
,
John Ward Economics
Edward Foster
,
University of Minnesota
JEL Classifications
  • K1 - Basic Areas of Law
  • J2 - Demand and Supply of Labor