The Race between Education and Technology (Hardcover)

~ Claudia Goldin (Author), (Author)
Key Phrases: mass higher education, school grad, relative skill supplies, United States, Three Transformations, World War (more...)

Editorial Reviews

Review

This book represents the best of what economics has to offer, combining a broad theoretical perspective, careful consideration of data, detailed lessons from economic history, and a close look at the present.
--Alan Krueger, Princeton University (20080702)

A masterful work by two leading economists on some of the biggest issues in economics: economic growth, human capital, and inequality. There are fundamental insights in the book, not just about our past but also our future. Rigorous but not overly technical, this beautifully written book will appeal to educated lay people and economists alike.
--Steven D. Levitt, University of Chicago, co-author of Freakonomics (20080704)

The Race Between Education and Technology will stand as the definitive treatment of changes in income distribution and their causes, as well as of possible countervailing policies towards rising inequality. This is empirical economic scholarship at its finest.
--Lawrence Summers, Harvard University (20080825)

A staggering achievement of historical research and analysis and required reading for anyone who's tired of glib, ideologically-inspired, trendy prescriptions for how to fix America's education system.
--Sylvia Nasar, author of A Beautiful Mind (20081005)

An impressive combination of extensive historical research, careful empirical analysis, and thoughtful commentary on one of the most important questions of the day: to what extent does increasing inequality in incomes stem from our failure to increase educational attainment?
--William G. Bowen, President Emeritus, The Andrew W. Mellon Foundation (20081126)

The Race Between Education and Technology is a most important study, both for what it teaches us about the past and also in presenting policies for the future if America is to regain its world leadership in education.
--Stanley Engerman, University of Rochester (20090201)

If you want to understand the causes of the innovation deficit, I’d recommend adding one serious book to your summer reading list: The Race Between Education and Technology.
--David Leonhardt (New York Times 20090216)

This is the most important book on modern U.S. inequality to date.
--Tyler Cowen (marginalrevolution.com 20090430)

[Goldin and Katz] tackle the most important U.S. economic trend, and, hence, most critical domestic issue--growing income inequality...[America] now has the most unequal income and wage distributions of any high-income nation...Goldin and Katz's careful documentation of the changes in income distribution is an important public service. This alone would make their book essential reading. Yet they also offer a powerful explanation for what has driven changes in income inequality and point to solutions for addressing it...The good news is that if Goldin and Katz are right, the cure for income inequality is one most Americans would intuitively support: improving mass education. Mr Obama's spin-doctors should start translating Goldin and Katz's book into a campaign slogan at once.
--Chrystia Freeland (Financial Times 20081201)

One of the most important books of the year.
--Nicholas D. Kristof (New York Times )

Masterful...As the book's title suggests, whether inequality increases or not is best thought of as an ongoing race between education and technology. Combining this simple but appealing idea with a deep knowledge of the histories of the U.S. labor market and educational institutions, Goldin and Katz conclude that whereas education was winning the race for most of the 20th century, technology caught up in the 1970s and has since prevailed. The authors' most insightful point is that the root cause of the recent growth in inequality is not faster technological progress during the past three decades but rather the surprising stagnation in the level of education of young Americans.
--Thomas Lemieux (Science )

The Race Between Education and Technology contains many tables, a few equations and a powerfully told story about how and why the United States became the world's richest nation--namely, thanks to its schools...Beginning in the 1970s, however, the education system failed to keep pace, resulting, Ms. Goldin and Mr. Katz contend, in a sharply unequal nation...It is nice to be reminded, in a data-rich book, that greater investments in human capital once put Americans collectively on top of the world.
--Stephen Kotkin (New York Times )

Essential reading...Goldin and Katz give a broad historical view of the role of education in economic growth in the U.S. They make the case that, after a century of leading the world in supplying the educated workers needed to serve technology, the U.S. has fallen behind in education.
--Thomas F. Cooley (Forbes )

Goldin's and Katz's thesis is that the 20th century was the American century in large part because this country led the world in education. The last 30 years, when educational gains slowed markedly, have been years of slower growth and rising inequality.
--David Leonhardt (New York Times Magazine )

Claudia Goldin and Lawrence Katz establish a clear link between the number of high school and college graduates produced in any modern society and its economic growth.
--Thomas D. Elias (Appeal-Democrat )

[Goldin and Katz] combine an acute sense of history with a skillful use of statistics.
--Andrew Hacker (New York Review of Books )

During the 20th century both technology and education raced forward in the US, generating massive economic expansion and rising standards of living. Throughout the century, technological changes increased the relative demand for skilled labor, while the rapid expansion of first high schools and then higher education simultaneously increased the relative supply of skilled labor. Goldin and Katz carefully examine the historical and economic forces behind this expansion in education, extracting crucial evidence from the remarkable Iowa State Census of 1915, and they argue very plausibly that the relative demand for skilled labor grew at a fairly constant rate over the century. They conclude that "education ran faster" than technology "during the first half of the century," causing a considerable drop in economic inequality, but that "technology sprinted ahead of limping education in the last 30 years," leading to the recent upsurge in inequality. The rate of return on educational investments has become, once again, very high. Why have education levels increased so sluggishly in the face of these massive rewards? The answers are not entirely clear, nor are the optimal public policies, but the authors offer much food for thought. A must read.
--R. M. Whaples (Choice )

Product Description

This book provides a careful historical analysis of the co-evolution of educational attainment and the wage structure in the United States through the twentieth century. The authors propose that the twentieth century was not only the American Century but also the Human Capital Century. That is, the American educational system is what made America the richest nation in the world. Its educational system had always been less elite than that of most European nations. By 1900 the U.S. had begun to educate its masses at the secondary level, not just in the primary schools that had remarkable success in the nineteenth century.

The book argues that technological change, education, and inequality have been involved in a kind of race. During the first eight decades of the twentieth century, the increase of educated workers was higher than the demand for them. This had the effect of boosting income for most people and lowering inequality. However, the reverse has been true since about 1980. This educational slow-down was accompanied by rising inequality. The authors discuss the complex reasons for this, and what might be done to ameliorate it.

(20081113)

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Product Details

• Hardcover: 496 pages
• Publisher: Belknap Press of Harvard University Press (June 30, 2008)
• Language: English
• ISBN-10: 0674028678
• ISBN-13: 978-0674028678
• Product Dimensions: 9.4 x 6.2 x 1.6 inches
• Shipping Weight: 2 pounds (View shipping rates and policies)
• Average Customer Review: 3.4 out of 5 stars  See all reviews (5 customer reviews)
• Amazon.com Sales Rank: #379,707 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

26 of 30 people found the following review helpful:

4.0 out of 5 stars Many unresolved issues, November 10, 2008

By	EWC - See all my reviews

I found this book fascinating and would recommend it although I found it frustratingly flawed, and therefore, without the authors' further comments, will eventually have to reduce my 4 star rating. The book's core thesis is that the rate of technological change in the 20th century has been constant, while the supply of skilled workers has been uneven, leading to expanding and contracting wage differentials between skilled and unskilled workers over the course of the century. The variation in supply and correlation to changes in relative wages seems large enough to be convincing. But while I find the case persuasive, I couldn't help but feel it was, in part, reserve engineered to reach its conclusion. It seemed to me that three critical issues remained either unwittingly or intentionally overlooked.

In part, large part perhaps, I would guess, the "skill" of a worker transcends their education. So a high school drop out today, when most everyone graduates from high school, represents a much less skilled worker than a drop out at the turn of the century, when very few graduated. To suggest the ratio of wages between high school graduates and drop outs today can be compared to the past without some adjustment, or even mention of an adjustment, that take this into consideration, seems lacking. The same is true of college graduates, where the meaning of the term has been averaged down. The analysis seems to suggest that a college or high school graduate is equivalent no matter what (changing) percentile of the population it encompasses or, more complicated mathematically, that the relative curve across percentiles is such that any point is logarithmically proportional to any other. While perhaps this is a second order issue on the margin, over the large shifts that have occurred in the education of various percentiles of workers over the course of the 20th century, leaving it unmentioned is disappointing.

While the mathematical logic of relative wages vs. relative supply (of skilled vs. unskilled workers) seems reasonable on the surface, it's not clear why expansion in the supply or demand of one would affect the ratio between them proportionally. It would seem, for example that the US has absorbed a large numbers of unskilled immigrants, it has offshored an unprecedented volume of "unskilled" goods, and it has accelerated productivity improvements and yet the unskilled wage has remained flat. That suggests that the marginal product of unskilled labor is largely flat over large shifts in volume. To argue that the expansion or contraction of supply drives (relative) wages up or down requires a downward sloping marginal product of labor, unskilled labor in this example. I don't see why that would necessarily be the case to the degree necessary to explain the data. Quite the contrary, it seems unlikely based on the prevailing flat wages. In that case, an expansion of unskilled workers would have no effect on the wages of unskilled or skilled workers and their subsequent ratio, whereas, in this example, the expansion of skilled workers could have such an effect. To assume they are wholly substitutable seems to be a stretch.

Similarly, the book overlooks both productivity issues and hours worked in analyzing the supply of labor. We know the most productive workers are now working longer hours than the rest of the working population. And it's hard to believe that the information age hasn't, to a very large extent, affected the productivity of the most productive workers. This would suggest that their supply has expanded far more than their headcount. If that's true, then if supply has expanded and wages have expanded, exogenous technological breakthroughs are likely driving up wages and not merely reduced relative headcount as the book argues.

Piecing these together, it seems easy to imagine significant changes in the relative productivity and resulting supply of skilled vs. unskilled labor, along with differing marginal product of labor, highly circumstantial substitutability, and varying rates of exogenous technological changes all significantly affecting these ratios in ways not considered by this analysis. Perhaps the authors' argument is better stated this way: if one assumes that the rate of technological change is constant, and that relative productivity changes between skilled and unskilled are similar (although the book argues that in the past that was not the case), and that substitutability is generally high, then relative headcount should drive relative wages; because it appears to be highly correlated, these assumptions are likely to be true. That's a pretty big leap of faith. And, if the authors are correct that it is merely a matter of relative supply, it's not at all clear to me why diminished relative supply of skilled workers has led to an increase in the percentage of overall income paid to skilled workers, as has been the case. Apparently there was previously far more of them than was optimal! I find that hard to believe and apparently so too the authors. And the recent 10 to 15 year growth in output per US worker relative to Europe and Japan, despite unfavorable demographic shifts in the US workforce (toward less educated Hispanic immigrants), seems greatly at odds with the book's analysis.

Lastly, the book is very weak on recommendations and in many cases what recommendations it does offer, a steeper income tax for example, hardly stem from the 300 pages of analysis that comes before. In another example, it suggests that testing is bad because it may increase drop out rates. But, I sit on the board of a charter school that today has outstanding test scores where previous testing and low scores put enormous pressure on the school to make positive changes, changes that were made because of the demand for higher scores. Again, there is little in the analysis to warrant their suggestion that more forgiving testing would be a net positive. I find the simplistic solutions largely unsupported by their analysis to be disappointing.

1 of 1 people found the following review helpful:

5.0 out of 5 stars Important and Convincing, September 6, 2009

By	R. Albin (Ann Arbor, Michigan United States) - See all my reviews (TOP 500 REVIEWER)    (REAL NAME)

This well written book is based on a careful analysis of the effects of educational policy on economic growth and economic inequality in the USA over the last century. The authors have undertaken the very demanding task of reconstructing a large amount of data related to eduational performance and economic performance. In some respects this is a fairly dense book with a lot of data presented, usually in the form of tables and simple charts, though the authors use some multivariate regression methods and some modeling as well. The authors necessarily use some simplifying assumptions and methods, for example, using the benefits of higher education - the college wage premium - as an index of inequality. Given the limitations of the data and the complexity of the topic, these approaches seem reasonable and the end result is a convincing analysis.

Goldin and Katz make a series of important points. One is that a well educated work force is an important driver of economic improvement. In this context, the show that the USA, from the mid-19th century to around 1970, was a world leader in mass education. They show 3 major waves of mass educational advancement; near universal primary education in the 19th century, a huge increase secondary education ("the high school movement") in the first half of the 20th century, and the enormous expansion of higher education in the post-WWII era. The authors argue very well that this distinctively American series of educational expansions were a major contributor to robust American economic growth. Simultaneously, the success of serial mass education and production of increasing numbers of well educated workers resulted in a relative reduction in inequality with social benefits beyond merely economic benefits. In the last generation, mass education has stagnated and the relative decrease in production of highly educated workers is a major driver of the increasing inequality of American life.

One of the authors' major points is captured by the title of the book. Given the constantly changing and improving technologies of modern economies, increasing numbers of well educated workers are needed merely to maintain a constant position, let alone to produce increasing welfare. Remarkably, Goldin and Katz argue very well that vigorous increases in education produce not only aggregate economic benefits but also reduced inequality. Investments in mass education produce winners across the board, an amazing effect.

Goldin and Katz see the USA as having gone off the tracks in last generation - roughly the period of conservative predominance of American politics. They point out as well several other nations, notably a number of European countries, have now closed the gap or surpassed the USA in mass education. This is true for indicators of the amount of mass education and quality of mass education. This will reduce American competitiveness in a global economy. The declining rate of educational attainment is a long term drag on economic attainment and causing economic inequality. Their prescription is to take steps to improve mass education. While detailed policy prescriptions are not the focus of this book, their recommendations are sensible. They advocate increased investment in early childhood education, particularly for poorer people, increased investment in K-12 education to improve graduation rates and college preparation, and making college education more accessible. All of this will cost considerable money, but appears to be justified well by this analysis.

5 of 7 people found the following review helpful:

4.0 out of 5 stars Vitally Important Scholarship, Despite Flaws, March 14, 2009

By	Michael Bishop "aspiring scientist of the social" (Chicago) - See all my reviews (REAL NAME)

Three stars? This book is undervalued by the current amazon reviews. In my opinion, a majority of books about education are downright bad. Of those that are good, many are not uniquely good - you can find the same information in other popular books on education. This book is good and unique.

This book is excellent on the links between education, productivity, and income inequality over the last century. It makes the case that increasing human capital through education is a very important goal - the claim is not original but the way they argue it is.

The policy recommendations are less well backed up.

Google for an excellent commentary written by Arnold Kling & John Merrifield, entitled "Goldin and Katz and Educational Policy Failures in Historical Perspective."