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A Tale of Two Skill Premia

Author

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  • Ahmed S. Rahman

    (United States Naval Academy)

Abstract

"The paper proposes a theory of demography that helps chart the evolution of skill premia both in England during its first and second Industrial Revolutions, and in the American 20th century. Skill-premia fell in England during the first Industrial Revolution to below 50%, staying below 50% through the entire 19th century, and fell in the U.S. during the first half of the 20th century. These facts are at odds with most theories of industrialization, which tend to imply rising premia as natural concomitants to economic growth. I develop a simple model of economic demography to help solve this puzzle. Conjecturing that households wished to maximize both their levels of income and the levels of education of their children, I demonstrate how rising education levels, non-monotonic fertility rates, and falling skill premia can all be explained within one theory."

Suggested Citation

  • Ahmed S. Rahman, 2008. "A Tale of Two Skill Premia," Working Papers 8021, Economic History Society.
    • Handle: RePEc:ehs:wpaper:8021
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • N33 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Europe: Pre-1913
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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