kitchen table math, the sequel: Tyler Cowan on The Race

Monday, August 4, 2008

Tyler Cowan on The Race

The most commonly cited culprits for the income inequality in America — outsourcing, immigration and the gains of the super-rich — are diversions from the main issue. Instead, the problem is largely one of (a lack of) education.


Starting about 1950, the relative returns for schooling rose, and they skyrocketed after 1980. The reason is supply and demand. For the first time in American history, the current generation is not significantly more educated than its parents. Those in need of skilled labor are bidding for a relatively stagnant supply and so must pay more.

The return for a college education, in percentage terms, is now about what it was in America’s Gilded Age in the late 19th century; this drives the current scramble to get into top colleges and universities. In contrast, from 1915 to 1950, the relative return for education fell, mostly because more new college graduates competed for a relatively few top jobs, and that kept top wages from rising too high.

Professors Goldin and Katz portray a kind of race. Improvements in technology have raised the gains for those with enough skills to handle complex jobs. The resulting inequalities are bid back down only as more people receive more education and move up the wage ladder.

Income distribution thus depends on the balance between technological progress and access to college and postgraduate study. The problem isn’t so much capitalism as it is that American lower education does not prepare enough people to receive gains from American higher education.


It doesn’t suffice simply to increase the number of people in college; rather the new students must be prepared to learn. There is, however, no single magic bullet.

Pessimists like Charles Murray, co-author of the much-debated 1994 book “The Bell Curve,” have argued that only so many individuals are educable at a high level. If that were the case, current levels of inequality might be here to stay.

But the evidence suggests that when additional higher education becomes available, it offers returns in the range of 10 to 14 percent per year of college, at least for the first newcomers to enroll.

Nonetheless it will, sooner or later, become increasingly difficult to deliver the gains from college — not to mention postgraduate study — to the entire population. Technology is advancing faster than our ability to educate. So even if inequality declines today, it may well intensify in the future. Even if American education improves at every level, the largely not-for-profit educational sector may simply be less dynamic than the progress of new technologies.

The lesson is this: Economists are homing in on the key to the inequality problem, but don’t think any solution will necessarily last for long.

Why Is Income Inequality in America So Pronounced? Consider Education
Tyler Cowen
Published: May 17, 2007

Ultimately, this is my question: does the race never end?

Or does "skill-biased technology change" just keep going and going and going until pretty soon you have to know calculus to turn on the TV. Speaking of which, we're not too far from that point around here, I often feel. At a minimum, being able to turn on the TV in our family room and actually watch something on it requires either genius-level working memory or months of deliberate practice. The set-up alone is complicated enough, but on top of that Verizon keeps changing the channel line-up. Seeing as how the cheapest package Verizon offers gives you 6 or 7 hundred thousand different channels to choose amongst, knowing where on the number line USA Network is located today is a job for SuperMemo.

I've got to get back to ALEKS. Soon.

Anyways...assuming the education system or the business world is able to create and distribute highly effective, efficient, and advanced education to the masses (the business world appears to be trying), presumably there's still going to be a limit on how far people can go in higher education, or how far they want to go, or maybe just how many genius trainers we can recruit who are patient enough to teach vector autoregression incrementally to the rest of us, step by step, day by day, until we finally get it 10 or 20 years down the line.

Once we reach that limit, then what?

Steve Levitt summarizes The Race in 2 sentences
Jimmy graduates

The anemic response of skill investment to skill premium growth
The declining American high school graduation rate: Evidence, sources, and consequences
Pushy parents raise more successful kids

The Race Between Education and Technology book review
The Race Between Ed & Tech: excerpt & TOC & SAT scores & public loss of confidence in the schools
The Race Between Ed & Tech: the Great Compression
the Great Compression, part 2
ED in '08: America's schools
comments on Knowledge Schools
the future
the stick kids from mud island
educated workers and technology diffusion
declining value of college degree
Steve Levitt summarizes The Race in 2 sentences
Goldin, Katz and fans
best article thus far: Chronicle of Higher Education on The Race
Tyler Cowan on The Race (NY Times)
happiness inequality down...
an example of lagging technology diffusion in the U.S.

the Times reviews The Race, finally
The anemic response of skill investment to skill premium growth
The declining American high school graduation rate: Evidence, sources, and consequences
IQ, college, and 2008 election
Bloomington High School & "path dependency"
the election debate that should have been

1 comment:

Catherine Johnson said...

I've posted this before, but I should repeat it here: there's no obvious reason why the race should not draw to an end at some point, or not that I can see.

During the 19th century the relationship between technological innovation and skill was reversed. Technology replaced skilled workers.

It's ironic to think that the Steven Leinwands of the world got things exactly backward when they figured calculators would reduce the need for computational skills.

Apparently, they were still living in the 19th century.