Wicca's dimples

[Brad De Long]

>
>Hey Brad-just hanging out at your web site. Pretty fancy! I got 233 results
>to my query on women and uncompensated labor. Started reading a Claudia
>Goldin article and soon hit a snag that's been bugging me for awhile,
>especially when I hear Reich,etc. touting higher education as the answer
>for the masses.  She points out that in 1914 a HS grad made 70% more than a
>factory worker and in 1926 when many more had gone through HS, grads only
>made 10%more.  How is this, on the whole, a good thing?  Isn't the whole
>rap about unskilled labor a trap? Somebody has to do this work, much more
>so in some cases than many skilled jobs, which are often counter-productive
>in the long run. These value judgements tend to move over time, according
>to what the dominate group is doing, who ever happens to be defining the
>credentials.  It's like private property.  An abstract desire made concrete
>by force. If 30 million illigal immigrants have MBA-s and Harvard starts
>giving degrees in landscaping, landscapers will become highly
>compensated,no? Well you get my drift.

I think that the Goldin-Katz line of argument (which Larry Katz got Robert
Reich to buy into in as big a way as he could, given that Congress nuked
all the extra money Reich asked for in 1993) is that the labor share of
total income didn't move between 1910 and the late 1920s, so the relative
wages of those without high school diplomas rose *a lot* while the relative
wages of those with formal education credentials *fell*.

Putting an extra person through high school in the 1920s...

...raised their wages (to the high-school-diploma level)

...diminished the wages of those who already had high school diplomas a bit

... raised the wages of those who didn't have high school diplomas a bit

It is what Goldin and Katz take to be the sensitivity of education wage
differentials to small changes in aggregate supplies that make them think
that the following strategy is worth pursuing today: have the Federal
government pay to put a bunch more people through community college, and
find the relative (and perhaps the absolute) wages of those with master's
degrees and B.A.'s fall as employers find that they can hire from a bigger
pool of those with formal skills, while the relative (and absolute) wages
of those without college diplomas rise. Harvard will certainly find another
credential than a B.A. to give its graduates--and they will still be at the
top of the income distribution. It won't be an egalitarian paradise, but it
will be better than we got now.

At least, it will be better than we got now as long as the increase in the
number of those with formal education doesn't lead to a dive in the labor
share of total income (and that seems to be a pretty good bet: the labor
share of total income doesn't move much), redistributing some of that labor
income from those with formal credentials and higher wages to those without
much education and lower wages would seem to be a very good thing.

Formal education is not only a pretty good investment for those who get
educated, but it also (by increasing the supply of those with the skills to
be in the upper half of the wage distribution, and decreasing the supply of
unskilled labor) twists the distribution of wages in a more egalitarian
distribution.

Such, at least, is the Goldin-Katz argument. And it seems to me that the
historical parallels are strong enough to make it probably true and
certainly very interesting to think about...

Brad DeLong