Economists

Created 2/21/1996
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Claudia Goldin

Another Extremely Complimentary Wall Street Journal Article
this one about my friend and patron Claudia Goldin

Reaching Back: Scanning the Future, Economic Historian Plumbs Distant Past

To Harvard's Claudia Goldin, Education Offers Hope for Middle-Class Kids; Lessons in 75-Year-Old Data

by

David Wessel

Most modern economists, the ones who actually look at the real world, don't gather data anymore. They pluck readily available numbers from big databases and run them through ever-more-powerful computers.

Claudia Goldin, a sort of historical detective, can't get the numbers she needs that way. She has to find them--in 75-year-old state reports locked up in Harvard University's Monroe C. Gutman Library, in handwritten records of a 1915 Iowa census preserved on microfilm by Mormons, in Citicorp's old personnel files.

"It's like the difference between gong into a store and buying things off the rack, and sitting at home and making them," the Harvard economist says.

At Gutman Library, Ms. Goldin thumbs through yellowing reports on early-20th-century public schools and sees hope for today's middle-class children. Peering into the future with a rear-view mirror, she finds evidence that in times of rapid technological change--which helps some workers and hurts many--education can have a powerful ameliorative effect.

"America led the world in high schools," she says. In 1910, only 10% of 18-year-olds in New York had diplomas; a generation later, most did. The "dumbing down" of high schools, transforming them from schools that taught Greek to the college-bound into schools that taught children of the masses how to read blueprints, changed the U.S. economy.

Wage Gap Narrowed

Combined with the advent of office machinery, which allowed average intellects to do what had been possible only for those who could manage sums in their heads, the increased supply of high-school graduates helped narrow the wage gap between office workers and factory workers. In 1914, a male office worker earned 70 percent more than a factory worker; in 1926, he earned only 10% more.

The hopeful lesson: Public education allowed children of farmer and factory workers to get the "good jobs" of the 1920s, and it narrowed the chasm between wages at the top and those in the middle. She believes that education could do the same today, an era in which the premium that employers pay to workers with skills, education, and computer know-how has been rising and wages of people without those advantages have been receding. To the extent that unskilled workers are losing their jobs to imports, she says, the solution is to train them for the higher-skilled jobs that remain; at some point, wages for the unskilled will fall so far below those of the skilled that employers will have an incentive to train them, she adds.

"Times are frightening if you have no historical perspective," she says. "It isn't as though we are going through a change that is unprecedented."
Widening Interests

To most U.S. economists, history began with the birth of the modern U.S. economy during the Depression. But even 20 years ago, the small band of analysts who used economic techniques and numbers to explore a more distant past--cliometricians, they are called, after Clio, the Greek muse of history--were preoccupied with slavery. Ms. Goldin was, too. Later, however, her field of inquiry widened. She used number-finding and number-crunching to study the changing role of women in the economy and the ups and downs of all wages.

"Claudia produces numbers and interpretations that you can trust," says Jeremy Atack, a Vanderbilt University economic historian. Indeed, what distinguishes Ms. Goldin and other cliometricians from conventional historians is their insatiable lust for measurements, and their creativity in finding them.

Ms. Goldin waves her hands at the Gutman Library shelves and says, "You can see the number of books written on the history of education, on the rise of high school, on ethnicity, on cities, you name it. Yet not a single one will give you a real quantitative feel." With outrage that only an academic could summon on such a subject, she raises her voice and says, "You sit there and read them and you scream in vain, 'How Many? What Percentage?'"

Lately, she has been poking around old corporate archives, looking at old personnel records for hard data on how wages of better-educated workers differed from those of people with less education.

"I went to Ford. They have 600,000 individual folders for workers who began from 1918 to 1947, but they did not fill in education," she says. Late last year, she went to the two-story warehouse where Citicorp keeps 500,000 boxes of old records. "I've never seen this many boxes," she says. "It's like some horrible nightmare after you move." Though unable to find the files she wanted, she remains hopeful.

"History doesn't just happen," she says. "It's discovered." Among her findings:

Ms. Goldin, a leading-edge baby boomer who turns 50 this year, is divorced and childless herself. After graduating from the Bronx High School of Science in New York at age 16, she attended Cornell University, got interested in economics and later became one of only four women in the University of Chicago's high-pressure graduate department. There, she took a course with a noted economic historian, Robert Fogel. "she was very bright, very independent-minded," he recalls. "It was pretty clear she was going to be a pretty substantial economist."

She doesn't recall it that way. "I had a Caesarean birth from graduate school," she says. "After four years, you were pushed out whether you were mature enough or not." Princeton University offered her a job teaching economic history, but she decided she didn't know enough. She spent two years at the University of Wisconsin before moving to Princeton and, later, the University of Pennsylvania.

Today, Ms. Goldin is the only tenured woman in Harvard's economics department. She also oversees work on American economic history at the National Bureau of Economic Research, the prestigious research institute housed over a furniture store near the campus. Her work is widely cited by economists--and by journalists because of her affable nature, choice of subjects, and quotable turns of phrase.

Among the work that has drawn attention within the profession is a paper she did with another economist, Robert Margo, that described the 1940s as a period in which the difference between wages paid to men of different skills and education narrowed unusually sharply. World War II was largely responsible, but the resulting wage structure lasted until 1970. By the mid-1980s, however, wage inequality had returned to 1940s levels, she says.

Ever curious, Ms. Goldin wondered what had happened to wages in earlier periods, and particularly the role played by the spread of high schools. With published national data failing to shed much light, she set out to collect the numbers state by state. She thought the job might take a month. Instead it took a couple of years.

The 1940 U.S. census--the first to inquire about education--was misleading because older respondents didn't understand the questions about schooling. It turned out that many institutions calling themselves "colleges" were really high schools. "And evening high schools"--where many working people studied--"are still the ben of my existence," she says, becasue their enrollments were not tallied with those of other high schools.

"There were tremendous mysteries," Ms. Goldin says. "Just about everything one does in academics, if you have some curiosity, is a real whodunit." Then someone told her the state of Iowa, enormously proud of its educational achievements, had conducted its own census in 1915 and 1925, recording each resident's education and wages.

Intrigued by what happened in Iowa and other wealthy agricultural states of "the education belt," she "raced back" to Gutman Library and started to read the state reports. "I hadn't really looked at them except to fill in a number now and then," she says. Slowly, she began to piece together the significance of "the high school movement" to American workers and the striking differences between, say, New England towns where high schools took root early and New Jersey towns where they didn't.

Recently, she has been trying to figure out which manufacturing industries drew the mots high-school graduates in the decades before World War II. Her preliminary answer: new industries, plus businesses that sold or serviced relatively new products such as autos. "In 1939," she says with the excitement of a baseball fan reciting batting averages, "your average filling-station attendant between 18 and 34 has a high-school degree. Why is that?"

With the answers to such questions not found in books, Ms. Goldin seeks clues wherever she goes. On an airliner a few weeks ago, she was seated next to an International Paper Co. executive. "He wanted to talk to me about the economy," she says. "I wanted to talk to him about machine tools, and what papermaking machinery looked like in 1910."

They talked about machinery.

Raw notes on Claudia Goldin's EHA Presidential Address

Professor of Economics J. Bradford DeLong, 601 Evans
University of California at Berkeley; Berkeley, CA 94720-3880
(510) 643-4027 phone (510) 642-6615 fax
delong@econ.berkeley.edu
http://www.j-bradford-delong.net/


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