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The Decline of Non-Competing Groups: Changes in the Premium to Education, 1890 to 1940

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  • Claudia Goldin
  • Lawrence F. Katz
Abstract
Between 1890 and the late 1920s the premium to high school education declined substantially for both men and women. In 1890 ordinary office workers, whose positions generally required a high school diploma, earned almost twice what production workers did. But by the late 1920s they earned about one and one-half times as much. The premium earned by female office workers, male office workers, and male office workers plus supervisors fell by about 30%. Several factors operated in tandem to narrow differentials to education. The supply of high school graduates relative to those without high school degrees increased by 16% from 1890 to 1910, but by 40% from 1910 to 1920 and by 50% from 1920 to 1930. Immigration restriction is another factor, but is dwarfed by the expansion of high schools; reduced immigrant flows explain just 1/8th of the relative supply increase of educated workers. The impact of rapidly increasing supplies of high school educated workers was reinforced by technological changes in the office that enabled the substitution of educated workers and machines for the exceptionally able. The premium to high school graduation, rather than declining further in the 1930s, levelled off as the demand for high school educated workers expanded in the manufacturing sector. We make comparisons between this historical period of narrowing wage differentials in the face of technological progress in the office and ours of widening differentials.

Suggested Citation

  • 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.
    • Handle: RePEc:nbr:nberwo:5202
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    References listed on IDEAS

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    Cited by:

    1. Claudia Goldin, 1999. "Egalitarianism and the Returns to Education during the Great Transformation of American Education," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages 65-94, December.
    2. Michaels, Guy, 2007. "The division of labor, coordination, and the demand for information processing," LSE Research Online Documents on Economics 3251, London School of Economics and Political Science, LSE Library.
    3. Saleh, Mohamed, 2015. "The Reluctant Transformation: State Industrialization, Religion, and Human Capital in Nineteenth-Century Egypt," The Journal of Economic History, Cambridge University Press, vol. 75(1), pages 65-94, March.
    4. 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.
    5. Goldin, Claudia & Katz, Lawrence F., 2000. "Education and Income in the Early Twentieth Century: Evidence from the Prairies," The Journal of Economic History, Cambridge University Press, vol. 60(3), pages 782-818, September.
    6. Daron Acemoglu, 2002. "Technical Change, Inequality, and the Labor Market," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 7-72, March.
    7. Claudia Goldin & Lawrence F. Katz, 1998. "The Origins of Technology-Skill Complementarity," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(3), pages 693-732.
    8. Brant Abbott & Giovanni Gallipoli, 2017. "Human Capital Spillovers and the Geography of Intergenerational Mobility," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 25, pages 208-233, April.
    9. Frey, Carl Benedikt & Osborne, Michael A., 2017. "The future of employment: How susceptible are jobs to computerisation?," Technological Forecasting and Social Change, Elsevier, vol. 114(C), pages 254-280.
    10. Peter Cappelli & William H. Carter, 2000. "Computers, Work Organization, and Wage Outcomes," NBER Working Papers 7987, National Bureau of Economic Research, Inc.
    11. Vitaliy Strohush & Justin Wanner, 2015. "College Degree for Everyone?," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 21(3), pages 261-273, August.
    12. Joseph P. Kaboski & Trevon D. Logan, 2011. "Factor Endowments and the Returns to Skill: New Evidence from the American Past," Journal of Human Capital, University of Chicago Press, vol. 5(2), pages 111-152.
    13. Berger, Thor & Frey, Carl Benedikt, 2016. "Did the Computer Revolution shift the fortunes of U.S. cities? Technology shocks and the geography of new jobs," Regional Science and Urban Economics, Elsevier, vol. 57(C), pages 38-45.
    14. Dennis J. Snower, 1998. "Causes of changing earnings inequality," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 69-133.
    15. Francisco Rodríguez, 2004. "Inequality, Redistribution, And Rent‐Seeking," Economics and Politics, Wiley Blackwell, vol. 16(3), pages 287-320, November.
    16. Robert A. Margo, 1999. "The History of Wage Inequality in America, 1820 to 1970," Economics Working Paper Archive wp_286, Levy Economics Institute.
    17. Koh, Youngsun, 2018. "The Evolution of Wage Inequality in Korea," KDI Policy Studies 2018-01, Korea Development Institute (KDI).
    18. Marina Adshade, 2012. "Female labour force participation in an era of organizational and technological change," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 45(3), pages 1188-1219, August.

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    JEL classification:

    • J0 - Labor and Demographic Economics - - General
    • N0 - Economic History - - General

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