"A Century of Human Capital and Hours"
with Diego Restuccia
May 2010
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"A Century of Human Capital and Hours" |
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Abstract:
A person in the United States born in the second half of the nineteenth century completed about 7 years of schooling and spent an average of 58 hours a week working in the market. By contrast, at the end of the twentieth century, people completed close to 14 years of schooling and spent about 40 hours a week working. In the span of 100 years, completed years of schooling doubled and working hours decreased by 31 percent. What explains these trends? We develop a model of human capital and labor supply to quantitatively assess the contribution of exogenous variations in productivity (wage) growth and life expectancy in accounting for the secular increase in educational attainment and the decrease in hours of work. We find that the observed increase in wages and life expectancy account for 87 percent of the increase in years of schooling and 88 percent of the reduction in hours of work. The increase in wages alone accounts for no less than 67 percent of the trend in schooling, and 98 percent of the decline in hours. While changes in life expectancy matter less, their contribution to the increase in schooling is not negligible: no less than 6 percent.
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"The Evolution of Education: A Macroeconomic Analysis" |
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Abstract:
Between 1940 and 2000 there has been a substantial increase of educational attainment in the United States. What caused this trend? Using a simple model of schooling decisions, we assess the quantitative contribution of changes in the return to schooling in explaining the evolution of education. We restrict changes in the returns to schooling to match data on earnings across educational groups and growth in aggregate labor productivity. These restrictions imply modest increases in returns that nevertheless generate a substantial increase in educational attainment: average years of schooling increase by 37 percent in the model compared to 23 percent in the data. This strong quantitative effect is robust to relevant variations of the model including allowing for changes in the relative cost of acquiring education. We also find that the substantial increase in life expectancy observed during the period contributed to only 7 percent of the change in educational attainment in the model.
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"The American Frontier: Technology versus Immigration" |
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Abstract:
How important was international immigration for the U.S. and its demography during the nineteenth century? This paper investigates, quantitatively, its effect on the westward movement of population and the regional and secular changes in fertility. Beside immigration, two alternative forces are considered: technological progress and the land policy (the Homestead Act). An optimal growth model with endogenous fertility and migration is calibrated, and counterfactual experiments reveal that the main driving forces were productivity growth and the declining cost of transportation. International immigration played a lesser role.
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"The U.S. Westward Expansion" |
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Discussion on Science Daily
Discussion on BioPact.com
Abstract:
The U.S. economic development in the nineteenth century was characterized by the westward movement of population and the accumulation of productive land in the West. This paper presents a model of migration and land improvement to identify the quantitatively important forces driving this phenomena. Two forces are key: the decrease in transportation costs induced the westward migration, while population growth was responsible for the investment in productive land.
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"Trends in Hours: The U.S. from 1900 to 1950" |
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Abstract:
During the first half of the 20th century the length of the workweek in the United States declined, and its distribution across wage deciles narrowed. The hypothesis is twofold. First, technological progress, through the rise in wages and the decreasing cost of recreation, made it possible for the average U.S. worker to afford more time off from work. Second, changes in the wage distribution explain the changes in the distribution of hours. A general equilibrium model is built to explore whether such mechanisms can quantitatively account for the observations. The model is calibrated to the U.S. economy in 1900. It predicts 82% of the observed decline in hours, and most of the contraction in their dispersion. The decline in the price of leisure goods accounts for seven percent of the total decline in hours.
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"A Quantitative Analysis of China's Structural Transformation" |
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Abstract:
The structural transformation of China--or the reallocation of resources from the agricultural sector to the nonagricultural sector--between 1978 and 2003 was truly remarkable. We develop a two-sector neoclassical growth model to quantitatively assess the driving forces of China's recent structural transformation. In addition to the forces currently emphasized in the literature--sectoral productivity growth--we show that China's transformation was accelerated significantly by the gradual reduction in the relative size of the Chinese government.
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"Hours Worked (long-run trends)" |
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For 200 years the average number of hours worked per worker declined, both in the market place and in the home. Technological progress is the engine of such transformation. Three mechanisms are stressed: (i) The rise in real wages and its corresponding wealth effect; (ii) The enhanced value of time off from work, due to the advent of time-using leisure goods; (iii) The reduced need for housework, due to the introduction of time-saving appliances. These mechanisms are incorporated into a model of household production. The notion of Edgeworth-Pareto complementarity / substitutability is key to the analysis. Numerical examples link theory and data.
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"The Baby Boom and Baby Bust" |
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Response to Bailey and Collins
The Baby Boom and Baby Bust in OECD Countries: Data and Graphs
Lecture Notes
Discussion by the Deutsche Bank Research Group
Abstract:
What caused the baby boom? And, can it be explained within the context of the secular decline in fertility that has occurred over the last 200 years? The hypothesis is that: (i) The secular decline in fertility is due to the relentless rise in real wages that increased the opportunity cost of having children. (ii) The baby boom is explained by an atypical burst of technological progress in the household sector that occurred in the middle of the last century. This lowered the cost of having children. A model is developed in an attempt to account, quantitatively, for both the baby boom and bust.