The Race between Education and Technology (review)
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The Race between Education and Technology. By Claudia Goldin and Lawrence F. Katz. Cambridge, Mass.: Belknap Press of Harvard University Press, 2008. Pp. 488. $39.95.

In this book, Claudia Goldin and Lawrence Katz serve up a compelling metaphor—one of a contest between human ingenuity on one side in the form of ongoing, sometimes rapid, technological development, and the ability of society, on the other side, to impart the necessary knowledge to the nation’s workforce that must utilize that technological infrastructure to carry on the operations of business and industry. The winners of this contest are those American workers who have enjoyed considerably higher wages as they worked their way up the educational ladder. The losers include those who have lagged behind as they have failed to make that climb. The cumulative effect of these wage variations can be seen in changing levels of income inequality, which, the authors note, has reached troubling heights since the late 1970s. The questions for Goldin and Katz are: what specific role has education played in all this and, ultimately, what do we do about it?

The book’s central argument rests on two social metrics. The first is wage inequality. Drawing on data from a variety of sources, including the U.S. census, government labor statistics, and the Iowa state census of 1915 (a particularly useful historical snapshot), the authors track a narrowing of income inequality from the late 1800s to around 1970, followed by a surge in inequality from then until 2005. Alongside this analysis they calculate the various “returns to education” for workers, the “return” being the average increase in wage that individuals earned with a particular level of schooling. The argument here is that those with enhanced intellectual skills have commanded a premium in the workplace, especially as business and industry adopted new technologies over time (the use of electric motors for manufacturing and continuous-process production methods early in the twentieth century, for example, and computers later on). Intellectual ability, therefore, is a key component of the argument, and Goldin and Katz gauge this second metric using levels of educational attainment of the U.S. population. They parse this part of their analysis into two categories, those [End Page 970] who earned a high school diploma and those who earned a four-year college degree, and draw their conclusions accordingly.

The “returns to education” (certainly a limited view of the value of education to society) were by no means constant over the course of the twentieth century, varying considerably from one era to the next and by level. These shifting wage premiums and resulting levels of income inequality, Goldin and Katz argue, can be explained by a rather simple story of supply and demand. As more educated workers made their way into the job market—either as a result of the rapid growth of high school attendance and graduation rates early on or from the burst of college-level enrollments with the GI Bill after the war—wage premiums went down and income inequalities narrowed. In periods when the educated workforce became scarce (such as we have seen recently with rising tuition costs depressing college enrollment numbers), educational wage premiums have increased and contributed to greater inequality. The authors’ recommendations not unexpectedly center on policies that would increase the supply of educated workers. These include increasing access to quality preschool education, improving K–12 education, and making access to college financial aid easier and more transparent.

At the heart of their argument, of course, is the assumption of an inherent connection between education and economic success, that the knowledge and skills learned in school or college are tightly coupled to the technical elements of business, industry, and economic development. This connection, though, is never fully examined. There is something problematic about using levels of educational attainment as the measure of knowledge when the knowledge itself taught in schools and colleges fluctuated dramatically over the course of the period under study. No one would deny the connection between educational level and economic value, and the authors have done a fine job of demonstrating this, at times in dramatic fashion. But a more fine...