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The Decline of Non-Competing Groups: Changes in the Premium to Education, 1890 to 1940

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  • Claudia Goldin
  • Lawrence F. Katz

Abstract

Between 1890 and the late 1920s the premium to high school education declined substantially for both men and women. In 1890 ordinary office workers, whose positions generally required a high school diploma, earned almost twice what production workers did. But by the late 1920s they earned about one and one-half times as much. The premium earned by female office workers, male office workers, and male office workers plus supervisors fell by about 30%. Several factors operated in tandem to narrow differentials to education. The supply of high school graduates relative to those without high school degrees increased by 16% from 1890 to 1910, but by 40% from 1910 to 1920 and by 50% from 1920 to 1930. Immigration restriction is another factor, but is dwarfed by the expansion of high schools; reduced immigrant flows explain just 1/8th of the relative supply increase of educated workers. The impact of rapidly increasing supplies of high school educated workers was reinforced by technological changes in the office that enabled the substitution of educated workers and machines for the exceptionally able. The premium to high school graduation, rather than declining further in the 1930s, levelled off as the demand for high school educated workers expanded in the manufacturing sector. We make comparisons between this historical period of narrowing wage differentials in the face of technological progress in the office and ours of widening differentials.

Suggested Citation

  • Claudia Goldin & Lawrence F. Katz, 1995. "The Decline of Non-Competing Groups: Changes in the Premium to Education, 1890 to 1940," NBER Working Papers 5202, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:5202
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    References listed on IDEAS

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    1. Robert K. Burns, 1954. "The Comparative Economic Position of Manual and White-Collar Employees," The Journal of Business, University of Chicago Press, vol. 27, pages 257-257.
    2. Goldin, Claudia, 1992. "Understanding the Gender Gap: An Economic History of American Women," OUP Catalogue, Oxford University Press, number 9780195072709.
    3. Claudia Goldin, 1994. "Appendix to: "How America Graduated from High School, 1910 to 1960", Construction of State-Level Secondary School Data," NBER Historical Working Papers 0057, National Bureau of Economic Research, Inc.
    4. Chinhui Juhn, 1994. "Wage Inequality and Industrial Change: Evidence from Five Decades," NBER Working Papers 4684, National Bureau of Economic Research, Inc.
    5. Claudia Goldin & Robert A. Margo, 1992. "The Great Compression: The Wage Structure in the United States at Mid-Century," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 1-34.
    6. Eli Berman & John Bound & Zvi Griliches, 1994. "Changes in the Demand for Skilled Labor within U. S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 367-397.
    7. George J. Stigler, 1950. "Employment and Compensation in Education," NBER Books, National Bureau of Economic Research, Inc, number stig50-1.
    8. Joshua L. Rosenbloom, 1994. "Was There a National Labor Market at the End of the Nineteenth Century? Intercity and Interregional Variation in Male Earnings in Manufacturing," NBER Historical Working Papers 0061, National Bureau of Economic Research, Inc.
    9. David H. Autor, 2001. "Wiring the Labor Market," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 25-40, Winter.
    10. Chamberlain, Gary & Griliches, Zvi, 1975. "Unobservables with a Variance-Components Structure: Ability, Schooling, and the Economic Success of Brothers," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 16(2), pages 422-449, June.
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    Citations

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    Cited by:

    1. Claudia Goldin & Lawrence F. Katz, 1999. "Education and Income in the Early 20th Century: Evidence from the Prairies," NBER Working Papers 7217, National Bureau of Economic Research, Inc.
    2. Vitaliy Strohush & Justin Wanner, 2015. "College Degree for Everyone?," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 21(3), pages 261-273, August.
    3. Goldin, Claudia & Katz, Lawrence F., 2000. "Education and Income in the Early Twentieth Century: Evidence from the Prairies," The Journal of Economic History, Cambridge University Press, vol. 60(03), pages 782-818, September.
    4. repec:kap:iaecre:v:21:y:2015:i:3:p:261-273 is not listed on IDEAS
    5. Joseph P. Kaboski & Trevon D. Logan, 2011. "Factor Endowments and the Returns to Skill: New Evidence from the American Past," Journal of Human Capital, University of Chicago Press, vol. 5(2), pages 111-152.
    6. Berger, Thor & Frey, Carl Benedikt, 2016. "Did the Computer Revolution shift the fortunes of U.S. cities? Technology shocks and the geography of new jobs," Regional Science and Urban Economics, Elsevier, vol. 57(C), pages 38-45.
    7. Dennis J. Snower, 1998. "Causes of changing earnings inequality," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 69-133.
    8. Frey, Carl Benedikt & Osborne, Michael A., 2017. "The future of employment: How susceptible are jobs to computerisation?," Technological Forecasting and Social Change, Elsevier, vol. 114(C), pages 254-280.
    9. Robert A. Margo, 1999. "The History of Wage Inequality in America, 1820 to 1970," Economics Working Paper Archive wp_286, Levy Economics Institute.
    10. Peter Cappelli & William H. Carter, 2000. "Computers, Work Organization, and Wage Outcomes," NBER Working Papers 7987, National Bureau of Economic Research, Inc.

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    JEL classification:

    • J0 - Labor and Demographic Economics - - General
    • N0 - Economic History - - General

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