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The Returns to Skill in the United States across the Twentieth Century

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Author Info
Claudia Goldin
Lawrence F. Katz

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Abstract

Economic inequality is higher today than it has been since 1939, as measured by both the wage structure and wealth inequality. But the comparison between 1939 and 1999 is largely made out of necessity; the 1940 U.S. population census was the first to inquire of wage and salary income and education. We address what the returns to skill were prior to 1940 and piece together the first century-long history of skill premiums, the dispersion of the wage structure, and returns to formal schooling. We use the 1915 Iowa State Census, a remarkable and unique document, as well as several less-obscure but untapped reports. Using all of these sources, we find that the wage structure narrowed at several moments in the first half of the 20th century, not just in the 1940s, both coinciding with major economic disruptions brought about by war. The returns to education were in fact higher in 1914 than in 1939, and the enormous expansion in secondary schooling beginning in the 1910s was a contributing factor to the decrease in educational returns. Inequality and the returns to education across the entire century, therefore, first declined before their more recent and steep ascent.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7126.

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Date of creation: May 1999
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Publication status: Published as "Amercia's Graduation from High School: The Evolution and Spread of Secondary Schooling in the Twentieth Century", Journal of Economic History, Vol. 58, no. 2 (June 1998): 345-374. Published as "Egalitarianism and the Returns to Education During the Great Transformation of American Education", Journal of Political Economy, Vol. 107, no. 6, part 2 (December 1999): S65-S94.
Handle: RePEc:nbr:nberwo:7126

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Find related papers by JEL classification:
J2 - Labor and Demographic Economics - - Demand and Supply of Labor
N3 - Economic History - - Labor and Consumers, Demography, Education, Income, and Wealth

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Claudia Goldin & Lawrence F. Katz, 1998. "The Origins Of Technology-Skill Complementarity," The Quarterly Journal of Economics, MIT Press, vol. 113(3), pages 693-732, August. [Downloadable!] (restricted)
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  2. Costa, Dora L, 1998. "The Unequal Work Day: A Long-Term View," American Economic Review, American Economic Association, vol. 88(2), pages 330-34, May. [Downloadable!] (restricted)
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  3. Wolff, Edward N, 1998. "Recent Trends in the Size Distribution of Household Wealth," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 131-50, Summer. [Downloadable!] (restricted)
  4. Eli Berman & John Bound & Zvi Griliches, 1994. "Changes in the Demand for Skilled Labor within U.S. Manufacturing Industries: Evidence from the Annual Survey of Manufacturing," NBER Working Papers 4255, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Murphy, Kevin M & Welch, Finis, 1992. "The Structure of Wages," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 285-326, February. [Downloadable!] (restricted)
  6. Goldin, Claudia & Margo, Robert A, 1992. "The Great Compression: The Wage Structure in the United States at Mid-century," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 1-34, February. [Downloadable!] (restricted)
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  7. Chinhui Juhn, 1999. "Wage inequality and demand for skill: Evidence from five decades," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 52(3), pages 424-443, April.
  8. Bishop, John Hillman, 1989. "Is the Test Score Decline Responsible for the Productivity Growth Decline?," American Economic Review, American Economic Association, vol. 79(1), pages 178-97, March. [Downloadable!] (restricted)
  9. Daron Acemoglu, 1998. "Why Do New Technologies Complement Skills? Directed Technical Change And Wage Inequality," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1055-1089, November. [Downloadable!] (restricted)
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