The Goldin and Katz Thesis

By Richard Vedder

Claudia Goldin and Lawrence Katz are both senior faculty at America's most prestigious university, and their new book The Race Between Education and Technology has received rave support from some eminent economists and other educational leaders. According to Goldin and Katz, America's non-elitist educational system propelled the nation to both higher economic growth and, until around 1970 or so, higher degrees of income equality. The slowdown in the growth in educational attainment since then, however, has led to both a growth slowdown and a move away from greater equity.

I have written a very long review of this book for the Claremont Review of Books. Suffice it to say here I think the book is fundamentally flawed. The book strings together a series of dubious assumptions with some serious errors of omission to suggest that our underspending on education is lowering equity and growth. The CCAP evidence, which is less inferential and more direct, is that the correlation between spending on higher education and economic growth is, at best, neutral, and, more likely, negative. Moreover, Daniel Bennett of our staff is finding that the assumption that increasing educational attainment will promote income equality is also probably faulty, although that research is still continuing.

Without going into too much detail, Goldin and Katz seem to assume that all persons are created equal in some very literal sense, and that interpersonal differences in human endowments are of trivial importance. I think Charles Murray and the late Richard Hernstein have certainly very appropriately called that view into question. Education is a screening device. To be sure, some gains in productivity can occur from attending college, but to assume that all the income differential between high school and college graduates is due to education itself is clearly incorrect. And as a reviewer on Amazon notes, the term "high school dropout" in 1900 probably connotes quite different levels of knowledge, learning, wisdom, etc., than it does today.

The authors spend four pages talking about the role that electricity played in the early twentieth century in promoting high school attendance, but virtually nothing on such issues as education as a screening device. Accordingly, I view this book as a biased, one-sided view of the role of education in the American economy.