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Education and Income in the Early 20th Century: Evidence from the Prairies

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  • Claudia Goldin
  • Lawrence F. Katz

Abstract

We present the first estimates of the returns to years of schooling before 1940 using a large sample of men and women, employed in a variety of sectors and occupations, from the Iowa State Census of 1915. We find that the returns to a year of high school, and to a year of college, were substantial in 1915 - about 11 percent for all males and in excess of 12 percent for young males. Some of the return to years of high school and college arose because more education allowed individuals to enter lucrative white-collar jobs. But we also find sizable educational wage differentials within the white- and blue-collar sectors. Returns to education above the 'common school' grades were substantial even within the agricultural sector. Given the high overall rate of return to secondary schooling, it is no wonder that the 'high school movement' took root in America around 1910, even in agricultural areas such as Iowa. Census data for 1940, 1950, and 1960 are used to show that returns to years of schooling were greater in 1915 than in 1940. We conclude that the return to education decreased sometime between 1915 and 1940 and then declined again during the 1940s.

Suggested Citation

  • 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.
  • Handle: RePEc:nbr:nberwo:7217
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    References listed on IDEAS

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    1. Lillard, Lee & Smith, James P & Welch, Finis, 1986. "What Do We Really Know about Wages? The Importance of Nonreporting and Census Imputation," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 489-506, June.
    2. Chinhui Juhn, 1999. "Wage Inequality and Demand for Skill: Evidence from Five Decades," ILR Review, Cornell University, ILR School, vol. 52(3), pages 424-443, April.
    3. Goldin, Claudia, 1998. "America's Graduation from High School: The Evolution and Spread of Secondary Schooling in the Twentieth Century," The Journal of Economic History, Cambridge University Press, vol. 58(02), pages 345-374, June.
    4. Claudia Goldin & Lawrence F. Katz, 1999. "The Returns to Skill in the United States across the Twentieth Century," NBER Working Papers 7126, National Bureau of Economic Research, Inc.
    5. Huffman, Wallace E., 1999. "Human Capital: Education and Agriculture," ISU General Staff Papers 199908010700001323, Iowa State University, Department of Economics.
    6. 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 178-197, March.
    7. Welch, F, 1970. "Education in Production," Journal of Political Economy, University of Chicago Press, vol. 78(1), pages 35-59, Jan.-Feb..
    8. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier.
    9. Paul Taubman & Terence Wales, 1972. "Mental Ability and Higher Educational Attainment in the 20th Century," NBER Books, National Bureau of Economic Research, Inc, number taub72-1, April.
    10. Claudia Goldin & Lawrence F. Katz, 1998. "The Origins of Technology-Skill Complementarity," The Quarterly Journal of Economics, Oxford University Press, vol. 113(3), pages 693-732.
    11. 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.
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    More about this item

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • N3 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy

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