More on the Skills Slowdown

Cato Unbound is hosting an interesting discussion this week of Charles Murray’s recent book, Real Education, which argues that America is sending too many young people to college and the 4-year BA should be replaced with shorter, more narrowly tailored vocation programs. Respondents Kevin Carey and Bryan Caplan both have interesting things to say. But what really caught our eye was economist Pedro Carniero’s response. Following a dissection of the evidence for and against Murray’s thesis, Carniero shifts focus to what he sees as a more pressing issue:

However, there is something else that I believe is a big deal. In 2003, Jim Heckman and I published a paper entitled Human Capital Policy (a chapter in Inequality in America: What Role For Human Capital Policies, edited by the MIT Press). Figure 1 in that paper, which is reproduced below (and which has been reproduced by many others, before and after us), graphs the proportion of individuals in successive cohorts attaining a college degree, a high school degree, and dropping out of high school (these are whites only, but similar patterns hold for other race groups; the data comes from the 2000 Current Population Survey). This figure shows that both the college enrollment rate and the high school dropout rate were rapidly improving for the cohorts born in the first half of last century, but for the cohorts born after 1950 there is a dramatic stagnation in education attainment. If education is an important engine of economic growth, a stagnant quality of the workforce may cause problems for growth in the years to come.

This stagnation occurred in spite of enormous increases in the returns to college in the 1980s and 1990s. So it may be that Murray’s contention that individuals are not responding to economic incentives is true, but if anything it is because they, or their parents, underestimate the value of education. Heckman and I argue that at very early ages we detect important gaps in the cognitive achievement of individuals coming from different backgrounds, which in turn are the main predictor of the gaps in their college enrollment. So, if we want to foster skill accumulation, we need to start with strong investments in early childhood, giving us a foundation on which follow up investments can successfully build on. That’s the real education problem, and that’s where the devil is really causing damage. But that discussion is not for today.

Apropos of this, we couldn’t agree more.