Friday, December 12, 2008

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.

1 comment:

Cowboy said...

Dr. Vedder:

Te first line in your blog stimulated some neurons that bounce around in my melon from time to time. "The Race Between Education and Technology"

What I wonder is: how does what is currently being taught in Higher Ed correlate with what is being practiced in private enterprise (or "the Real world").

For example: Is the Electrical Engineering College teaching Low K, Copper Eclectro Plating (ECD) processes? If they are not, they are lagging far behind industry.

There is, I believe a lag in Higer Ed teaching and coursework and industry practices and. A proportion of the lag is to be accepted.

What is the total difference between what is being taught and what is being practiced?

Would this not be a measure of a college's "Productivity"?

Indeed, I have witnessed (and experienced) that entry level college grads need time and training to become proficient in their jobs and compete with their veteran peers. So the question then becomes: How many hours of formal training, informal traing, and practice is required to become an equal producer after they graduate from college and when they get their first job.

My father was an executive at a large company based in Cincinnati, OH. He told me after I graduated that the first two years of work are the last two years of college. This indicated to me that by his observation and experience, it would take me (or anyone else) two years to come up to speed and be a 100% contributor.

How one establishes a baseline for where industry is, is unkown to me. But if it can be established, I believe the difference between the baseline and "hours of formal training, informal traing, and practice required to become an equal producer after graduation from college and getting their first job" can be an effective measure of productivity.

It is not a measure of what the student brings to the school (ingredients), rather it would be a measure of what the student takes away from the school (the meal).

Just some thoughts on how productivity can be measured - for better or worse.