Worklife expectancy is one of the most significant variables employed by economists to calculate the monetary award in cases involving wrongful death or personal injury. We are in the progress of updating the econometric model of worklife expectancy of Millimet et al.

In the coming days and weeks we will be reporting on our progress and providing output tables as we produce them.

Some woklife expectancy references:

Flinn C.J. & Heckman J.J. (1982) “New Methods for Analyzing Structural Models of Labor Force Dynamics” Advances in Econometrics.

Millimet, D., Nieswiadomy, M., Ryu, H. & Slottje, D. (2003). “Estimating worklife expectancy: an econometric  approach.”  Journal of Econometrics.

Millimet, D. Nieswiadomy, M. & Slottje, D. (2010). “Detailed Estimation of Worklife Expectancy for the Measurement of Human Capital: Accounting for Marriage and Family.” Journal of Economic Surveys.

Nelson, D. (1983). “The use of worklife tables in estimates of lost earning capacity.” Monthly Labor Review.

Nieswiadomy, M., and Silberberg, E. (1988). “Calculating Changes in Worklife Expectancies and Lost Earnings in Personal Injury Cases.” The Journal of Risk and Insurance.  

Skoog, G. R. and Ciecka, J.E. (2001). “The Markov (Increment-Decrement) Model of Labor Force Activity: New Results beyond Work-Life Expectancies.” Journal of Legal Economics.

In a recent document and interview, GM has laid out its plan to compensate people injuried or those with familiy members who were killed due to product defects.  The full plan can be found here.  Some highlights are below.

Types of claims covered by plan:

1. Individual Death Claims
2. Category One Physical Injury Claims: claims involving quadriplegic injury,
paraplegic injury, double amputation, permanent brain damage requiring
continuous home medical assistance, or pervasive burns encompassing a
substantial part of the body.
3. Category Two Physical Injury Claims: claims, other than Category One
Physical Injury Claims, that, within 48 hours of the accident, require either
overnight hospitalization of one or more nights or, in extraordinary
circumstances as determined on a case by case basis by the Administrator,
outpatient medical treatment

METHODOLOGIES FOR CALCULATING COMPENSATION

1. Track A – Presumptive Compensation
The Track A presumed methodology relies upon a combination of the decedent’s
historical earnings and personal details with assumptions of likely future events based
upon multiple sources of publicly available national data including the Bureau of Labor
Statistics and the Internal Revenue Service. Eligible Claimants need not present detailed
computations or analyses

This Track A presumed methodology ensures consistent economic loss calculations for
similarly situated victims (i.e., same age, number of dependents and income level)

2. Track B – Complete Economic Analysis

Track B entails a complete, comprehensive economic loss analysis of the decedent’s past,
present and assumed future income. The Facility will consider the financial history of the
decedent through incorporation of submitted individual income data, including past,
present and future earnings, wage growth, work life expectancy, etc., as well as other
case-specific information and circumstances of the decedent that the claimant believes
the Facility should consider in determining the total value of the claim. I

Non-economic losses will also be determined as follows.

• $1,000,000 for the death of the decedent, and
• $ 300,000 for the surviving spouse, and
• $ 300,000 for each surviving dependent of the decedent.

In addition, life care plans to cover future medicals will also funded for injured individuals needing future care.

In a recent document and interview, GM has laid out its plan to compensate people injuried or those with familiy members who were killed due to product defects.  The full plan can be found here.  Some highlights are below.

Types of claims covered by plan:

1. Individual Death Claims
2. Category One Physical Injury Claims: claims involving quadriplegic injury,
paraplegic injury, double amputation, permanent brain damage requiring
continuous home medical assistance, or pervasive burns encompassing a
substantial part of the body.
3. Category Two Physical Injury Claims: claims, other than Category One
Physical Injury Claims, that, within 48 hours of the accident, require either
overnight hospitalization of one or more nights or, in extraordinary
circumstances as determined on a case by case basis by the Administrator,
outpatient medical treatment

METHODOLOGIES FOR CALCULATING COMPENSATION

1. Track A – Presumptive Compensation
The Track A presumed methodology relies upon a combination of the decedent’s
historical earnings and personal details with assumptions of likely future events based
upon multiple sources of publicly available national data including the Bureau of Labor
Statistics and the Internal Revenue Service. Eligible Claimants need not present detailed
computations or analyses

This Track A presumed methodology ensures consistent economic loss calculations for
similarly situated victims (i.e., same age, number of dependents and income level)

2. Track B – Complete Economic Analysis

Track B entails a complete, comprehensive economic loss analysis of the decedent’s past,
present and assumed future income. The Facility will consider the financial history of the
decedent through incorporation of submitted individual income data, including past,
present and future earnings, wage growth, work life expectancy, etc., as well as other
case-specific information and circumstances of the decedent that the claimant believes
the Facility should consider in determining the total value of the claim. I

Non-economic losses will also be determined as follows.

• $1,000,000 for the death of the decedent, and
• $ 300,000 for the surviving spouse, and
• $ 300,000 for each surviving dependent of the decedent.

In addition, life care plans to cover future medicals will also funded for injured individuals needing future care.

Abstract (From Millimet et. al)

Measuring an individual’s human capital at a point in time as the present actuarial value of expected net lifetime earnings has a lengthy history. Calculating such measures requires accurate estimates of worklife expectancy. Here, worklife estimates for men and women in the USA categorized by educational attainment, race, marital status, parental status and current labour force status are presented. Race has a much larger impact on the worklife expectancy of men than women. Education is associated with larger worklife differentials for women. The association between marriage and worklife expectancy is significant, but of opposite sign, for men and women: married women (men) have a lower (higher) worklife expectancy than single women (men). Parenthood is associated with a reduction in the worklife expectancy of women; the association is smaller and varies from positive for some education/marital status groups to negative for others for men.

From:

DETAILED ESTIMATION OF WORKLIFE EXPECTANCY FOR THE MEASUREMENT OF HUMAN CAPITAL: ACCOUNTING FOR MARRIAGE AND CHILDREN
Daniel L. Millimet
Southern Methodist University
Michael Nieswiadomy
University of North Texas
Daniel Slottje
Southern Methodist University:

According to the BLS, its most recent re-classification of education in the Consumer Expenditure (CE) survey better reflects income and spending patterns in the US. The BLS reports this in Beyond the Numbers: Prices & Spending, vol. 3, no. 1 (U.S. Bureau of Labor Statistics, January 2014.

Starting with the release of calendar year 2012 CE data, classification of household expenditures by the education of the reference person was changed.  In the latest release, and into the future, education will be replaced by classification by the highest level of education attained by any consumer unit (CU) member.  So for example, if the Husband is the reference person and has a Bachelor’s degree and the wife has a Post-graduate degree, the household’s education in the post 2012 data will be classified as Post-Graduate instead of Bachelors/College Graduate.

Ann Foster, the author of article, states that the rationale for the change was that the highest level of education attained by any household member more accurately reflects income and spending patterns than does the education level of the reference person only.

Source:

Ann C. Foster, “New education classification better reflects income and spending patterns in the Consumer Expenditure Survey ,” Beyond the Numbers: Prices & Spending, vol. 3, no. 1 (U.S. Bureau of Labor Statistics, January 2014), http://www.bls.gov/opub/btn/volume-3/education-classification-and-income-and-spending-patterns.htm

That is a central question in many wrongful employment termination lawsuits.  The plaintiff’s back and front pay earnings claims revolve around the answer to this question.  The length of an individual’s job search time depends on a number of factors.  These factors include the individual’s work background, type of job, number of other qualified job searchers, and geographical area.  The individual’s job search methods and efforts are also important factors.

In our work we study these types of job search factors in conjunction with the number of job searchers and employer demand for the relevant job position.

We have studied the labor market conditions for many job positions.  In recent analyses we have studied the labor market for accountants, network computer administrators, and operations managers.  The number of statewide job openings and searchers per job openings is shown in the table below.  Searchers per job openings ratios that are less than 1.0 indicate that there are more job openings than job searchers for the particular job.  Job searcher per job openings ratios greater than 1.0 indicate that there are more job searchers than job openings for the particular job..

Methodology

Number of job openings (Labor demand by employers): Based on the distribution of specific job openings in an industry, city and occupational classification.  Data sources include U.S. Bureau of Labor Statistics databases:  JOLT, CPS, and LAUS.

Number of job searchers (Labor supply by individuals): Based on geographical area(s) labor force, percentage of the labor force in each occupation, unemployment rate, and an unemployment rate adjustment factor associated with the occupation.  Data sources include U.S. Bureau of Labor Statistics databases:  JOLT, CPS, and LAUS.

Learn more read the article.

Expectation damages are damages intended to cover what the injured party expected to receive from the a contract and usually have straightforward calculations based on the contract itself or market value.

‘Reference Guide on Estimation of Economic Losses in Damages Awards’, by Robert Hall and Victoria Lazear is a frequently cited source for more discussion on business damages.  The Reference Guide is part of the courts larger manual: : Reference Manual on Scientific Evidence.

Economist Robert Hall