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Title: The Returns to Education in the Early Twentieth Century: New Historical Evidence

Citation Type: Working Paper

Publication Year: 2006

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Abstract: There is a large literature that looks at skill biased technical change, both in developed anddeveloping countries. The emerging consensus is that returns to education were U-shaped over thetwentieth century in the United States. We construct a model which highlights the role that resourceendowments play in the returns to education and their interaction with skill biased technical change.Given the regional labor markets and different sectoral structures in different areas of the countrythere is reason to expect considerable geographic variation in returns to education in the early 20thcentury. We use a new data source, a report from the U.S. Commissioner of Education in 1909, toestimate the returns to education of high school teachers in the early twentieth century. Overall,we find significant regional variation in the returns to education, with large (within-occupation)returns for the Midwest (7%), but much lower returns in the South (3%) and West (0.5%). Wereject the hypothesis that the returns in the Midwest are equal to the returns in the South. Weprovide evidence that our results are generalizable to returns to education in the United States andthat returns to education for teachers tracked quite closely with the overall returns to educationfrom 1940 onward. These results suggest that we should expect variation in returns to educationwith skill biased technological change if there are significant differences in resource endowmentsbefore the technological change.

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Authors: Logan, Trevon D.; Kaboski, Joseph

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Institution: Ohio State University

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Publisher Location: Columbus, OH

Data Collections: IPUMS USA

Topics: Education, Labor Force and Occupational Structure

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