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The Race between Education and Technology

reviewed by Sandra McNally - June 02, 2010

coverTitle: The Race between Education and Technology
Author(s): Claudia Goldin and Lawrence F. Katz
Publisher: Belknap Press, Cambridge
ISBN: 0674035305, Pages: 496, Year: 2010
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This book is a gallop through 20th Century America covering three broad areas: economic growth and distribution; major forces behind mass education and what characterized these transformations; and finally the “race” between technology and education. The authors argue that this was simultaneously “the American Century” in terms of economic growth and the “Human Capital Century.” The book is about how the two are linked.

We are first given a broad picture of how the 20th Century evolved in America, starting from a snapshot of global schooling rates at the beginning of the 21st Century. For many years, America was the world leader in terms of educating its people, but is now surpassed by other countries. We learn that the process of mass secondary education began much earlier in the US than in Europe and how it grew over time. The relationship between education and growth is estimated for various periods and we see a consistent and fairly stable pattern over the years. The effect of education is estimated to have increased labor productivity by at least a third per year between 1915 and 2005.

Most of us will be used to hearing about the massive inequality in America, as in other countries. This seems to have gone on for years. One of the fascinating accounts of the book is how inequality has evolved over the 20th Century in America and how there is no necessary relationship between economic growth and inequality. For much of the 20th Century, economic growth did not come at the expense of greater inequality. Also, inequality has been high in the past (in 1940), before reducing in subsequent years and then escalating since the early 1970s in an apparently endless upward spiral. Something else that changed in the 1970s is that educational attainment started slowing down for young labor market entrants. As the authors put it, “Everything came to a halt in the 1970s. America started to grow more slowly and Americans began to grow apart” (p. 87). Returns to college education, though always high, grew markedly for young cohorts coming into the labor market beginning in the 1980s.

The final installment of the broad overview of 20th Century America is the role of technology. There has been much research on how such “skill-biased technological change” increases the demand for highly skilled workers at the expense of low-skilled workers. Was the computer revolution the culprit for explaining why economic inequality increased so much since 1980? The short answer is “no” – not on its own. Technological change did not begin with the invention of the computer and has been similarly skilled-biased at other parts of the 20th Century. The relative demand for educated workers has been fairly stable over decades since the 1950s. However, the relative supply of skilled workers has slowed down. It is the combination of these two phenomena that has led to the rise in the return to college education and greater inequality.

The second part of the book is about how education was transformed in America and what characterized the American system. It begins with a discussion of what the authors see as “virtues” of the American system (although “virtue” is a misnomer here. The authors are talking about features that have advantages and disadvantages according to time and context). They see these “virtues” as public funding; public provision; separation of church and state; a decentralized system of school organization and funding; “an open structure in which youthful transgressions were often forgiven” and co-educational schooling. After a thorough discussion of these issues, they discuss the economic foundations of the high school movement and then give a detailed account of the evolution of enrolment and graduation rates in different parts of the US. They try to explain what accounts for variation in the extent of high school graduation across various states, finding that the following factors all have a role to play: wealth, income, relative homogeneity of the population, the distribution of income, the opportunity cost of youthful employment, state support for higher education, and the stability of the community. They then discuss the evolution of higher education. A particularly interesting discussion is on the comparison between men and women. The authors are able to chart college attendance rates for males and females for those born in 1876 right up to 1980. It is fascinating to see how up to around 1915 college attendance rates were equal for men and women. Then for several decades, the growth in college attendance was markedly higher for men, before women born in the mid-1950s took over.

The final part of the book, “the Race between Education and Technology,” brings together earlier themes and expands on them. There is a more formal analysis of the college wage premium and how supply and demand of college educated workers has changed over time. One of the many interesting findings shown in this analysis is how small a role immigration has played in explaining changes in the returns to education. Then in a final chapter the authors recapitulate on what they see as the ‘virtues’ of the American education system and briefly discuss ‘how America can win the race for tomorrow’ by addressing some of the causes for what has gone wrong.

This book is remarkable for its careful documentation and analysis of trends from the 1890s up to the present time. Very often Labor Economists are used to “history” starting somewhere in the 1960s or later. It is most unusual and enlightening to have such detailed analysis conducted over such a long period. A lesson from the book is how easy it is to lose perspective and come to the wrong conclusions by focusing too exclusively on the recent past: economic growth has not always led to greater inequality; technological change is nothing new and cannot account (at least not on its own) for rising inequality or higher returns to education. The book is very well written. Much of it is accessible to people without a background in economics and the detailed parts could be skipped without losing the intuition for what the authors are explaining. On the other hand, there is plenty of detail for students and academics. However, this is no dry, detached account of American history. There is a good deal of patriotic fervor and emotive language. The authors present rather a crude caricature of European education, and the statements about US historic superiority in this regard are too often repeated. Things changed some time ago, and perhaps it is now time to find out about “virtues” in other countries. I would have liked to read more about what the authors think are the unanswered questions and major research challenges. However, overall, the book is great. Everyone with an interest in these questions should read it, though it might provoke as well as inform.

Cite This Article as: Teachers College Record, Date Published: June 02, 2010
https://www.tcrecord.org ID Number: 15999, Date Accessed: 1/18/2022 8:13:54 AM

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About the Author
  • Sandra McNally
    London School of Economics
    E-mail Author
    SANDRA MCNALLY is a Senior Research Fellow at the Centre for Economic Performance at the London School of Economics. She is the Director of the Education Programme at the Centre. She works on a broad range of issues in the economics of education. Her recent work has been published in the Journal of Public Economics, the Journal of the European Economics Association and the Economic Journal. Current research projects include whether better careers information changes student expectations; the effects of school-based interventions on outcomes (e.g. higher resources; pedagogical strategies); immigration and educational attainment.
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