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J Econ (2009) 98:9395
DOI 10.1007/s00712-009-0077-8
BOOK REVIEW
Published online: 28 May 2009 Springer-Verlag 2009
Goldin and Katz provide a careful historical analysis of the co-evolution of educational attainment and the wage structure in the United States through the twentieth century. Although it is centred on the US, the book is of potential interest for all readers concerned with the role of education and human capital in an increasingly complex world.
The authors combine a sound theoretical perspective and careful consideration of data with detailed lessons from economic history and a close look at the present. In the hope of organizing the thoughts about this interesting book I will look at each one of these points in turn.(1) The theoretical framework is based on the notion of skill-biased technology. In simple words each new technology requires new skills, for example a new production process or a new invention requires workers with new skills to operate it. Skills are provided by the education system, some workers will acquire the new skills and enjoy higher wages, some other workers will not acquire the new skills and will lag behind. The wage gap between the skilled and the unskilled (the skill premium) will depend on how abundant the new skills are in the population. The higher the number of workers equipped with the new skills, the lower the wage premium they can command.
In other words this book argues that technological change and education have been involved in a kind of race. The race is between supply and demand for skills where supply of skills is provided by the education system at all levels (primary school, secondary school and college) and demand for skills is driven by technological change. But the mechanisms at the basis of supply and demand are very different: the skill bias of technology is viewed as constant over time, i.e. every year the demand for skilled workers increases at a constant pace thus creating excess demand...