Skip to main content Accessibility help

We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.

Close cookie message
×
Hostname: page-component-cd9895bd7-dk4vv Total loading time: 0 Render date: 2024-12-22T10:50:09.481Z Has data issue: false hasContentIssue false

3 - Human Capital and Long-Run Economic Growth

from Part II - Labor and Economic Growth

Published online by Cambridge University Press:  21 October 2021

By
Flávio Cunha
Edited by
John W. Diamond  and
George R. Zodrow
John W. Diamond
Affiliation:
Rice University, Houston
George R. Zodrow
Affiliation:
Rice University, Houston
Get access

Summary

In recent decades, the US economy has experienced a decline in the growth rate of labor productivity and an increase in economic inequality. This chapter reviews the empirical literature that suggests that these two facts are partially determined by the decline in the growth rate of the supply of skilled labor. It provides evidence that this downward trend in the growth rate of the stock of human capital has occurred in spite of significant progress in access to post-secondary education. The literature summarized here suggests that achieving higher growth rates in skills supply requires improving the post-secondary enrollment and graduation rates of children born in disadvantaged families. This is a challenge because disadvantaged children tend to lag very early in life in developing the skills that would make them college-ready. Therefore, public policy needs to invest more in the human capital of disadvantaged children, during early childhood as well as their school-age years. The chapter summarizes the impact of promising interventions that could shape public policy along these lines, fostering a diverse set of dimensions of human capital.

Keywords

human capitallabor productivitysemiconductor industrybiotechnology industryinequalitysocioeconomic gaps
Type
Chapter
Information
Prospects for Economic Growth in the United States , pp. 41 - 77
Publisher: Cambridge University Press
Print publication year: 2021

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Algan, Yann, Beasley, Elizabeth, Vitaro, Frank, and Tremblay, Richard E., 2014. “The Impact of Non-cognitive Skills Training on Academic and Non-academic Trajectories: From Childhood to Early Adulthood.” Working Paper. SciencesPo, Paris, France.Google Scholar
Almeida, Paul, and Kogut, Bruce, 1999. “Localization of Knowledge and the Mobility of Engineers in Regional Networks.” Management Science 45 (7), 905–17.Google Scholar
Altintas, Evrim, 2016. “The Widening Education Gap in Developmental Child Care Activities in the United States, 1965–2013.” Journal of Marriage and Family 78 (1), 26–42.CrossRefGoogle Scholar
Arrow, Kenneth J., 1962. “Economic Welfare and the Allocation of Resources for Inventions.” In Nelson, Richard R. (ed.), The Rate and Direction of Inventive Activity: Economic and Social Factors, 609–26. Princeton University Press, Princeton, NJ.Google Scholar
Audretsch, David, and Feldman, Maryann P., 2004. “Knowledge Spillovers and the Geography of Innovation.” In Henderson, J. Vernon and Thisse, Jacques (eds.), Handbook of Regional and Urban Economics, 2713–39. Elsevier, Amsterdam, Netherlands.Google Scholar
Bailey, Martha J., and Dynarski, Susan M., 2011. “Inequality in Postsecondary Education.” In Duncan, Greg J. and Murnane, Richard J. (eds.), Whither Opportunity? Rising Inequality, Schools, and Children’s Life Chances, 117–32. Russell Sage, New York, NY.Google Scholar
Belley, Philippe, and Lochner, Lance, 2007. “The Changing Role of Family Income and Ability in Determining Educational Achievement.” Journal of Human Capital 1 (1), 37–89.Google Scholar
Boldrin, Michele, and Levine, David K., 2013, “The Case Against Patents.” Journal of Economic Perspectives 27 (1), 3–22.CrossRefGoogle Scholar
Brooks-Gunn, Jeanne, Gross, Ruth T., Kraemer, Helena C., Spiker, Donna, and Shapiro, Sam, 1992. “Enhancing the Cognitive Outcomes of Low Birth Weight, Premature Infants: For Whom Is the Intervention Most Effective?” Pediatrics 89 (6, Part 2), 1209–15.Google Scholar
Bureau of Labor Statistics, 2019. “Employer Costs for Employee Compensation.” News Release USDL-19–1649, www.bls.gov/news.release/pdf/ecec.pdf.Google Scholar
Carneiro, Pedro, and Ginja, Rita, 2014. “Long-Term Impacts of Compensatory Preschool on Health and Behavior: Evidence from Head Start.” American Economic Journal: Economic Policy 6 (4), 135–73.Google Scholar
Case, Anne, Lubotsky, Darren, and Paxson, Christina, 2002. “Economic Status and Health in Childhood: The Origins of the Gradient.” American Economic Review 92 (5), 1308–34.Google Scholar
Conti, Gabriella, Heckman, James J., Moon, Seong, and Pinto, Rodrigo, 2012. “The Long-Term Health Effects of Early Childhood Interventions.” Working Paper. University of Chicago, Chicago, IL.Google Scholar
Cook, Philip J., Dodge, Kenneth, Farkas, George, Fryer Jr., Roland G., Guryan, Jonathan, Ludwig, Jens, Mayer, Susan, Pollack, Harold, and Steinberg, Laurence, 2014. “The (Surprising) Efficacy of Academic and Behavioral Intervention with Disadvantaged Youth: Results from a Randomized Experiment in Chicago.” NBER Working Paper No. 19862. National Bureau of Economic Research, Cambridge, MA.Google Scholar
Cunha, Flávio, Elo, Irma, and Culhane, Jennifer, 2013. “Eliciting Maternal Expectations about the Technology of Cognitive Skill Formation.” NBER Working Paper No. 19144. National Bureau of Economic Research, Cambridge, MA.Google Scholar
Cunha, Flávio, and Heckman, James J., 2007. “The Technology of Skill Formation.” American Economic Review 97 (2), 31–47.CrossRefGoogle Scholar
Cunha, Flávio, Heckman, James J., Lochner, Lance, and Masterov, Dimitriy V., 2006. “Interpreting the Evidence on Life Cycle Skill Formation.” In Hanushek, Eric and Welch, Finis (eds.), Handbook of the Economics of Education, 697–812. Elsevier,Amsterdam, Netherlands.Google Scholar
Cunha, Flávio, Heckman, James J., and Navarro, Salvador, 2005. “Separating Uncertainty from Heterogeneity in Life Cycle Earnings.” Oxford Economic Papers 57 (2), 191–261.CrossRefGoogle Scholar
Currie, Janet, and Rossin-Slater, Maya, 2015. “Early-Life Origins of Life-Cycle Well-Being: Research and Policy Implications.” Journal of Policy Analysis and Management 34 (1), 208–42.CrossRefGoogle ScholarPubMed
Duncan, Greg J., and Sojourner, Aaron J., 2013. “Can Intensive Early Childhood Intervention Programs Eliminate Income-Based Cognitive and Achievement Gaps?” Journal of Human Resources 48 (4), 945–68.Google Scholar
Elango, Sneha, García, Jorge Luis, Heckman, James J., and Hojman, Andrés, 2015. “Early Childhood Education.” NBER Working Paper No. 21766. National Bureau of Economic Research, Cambridge, MA.Google Scholar
Evens, Ronald, and Kaitin, Kenneth, 2015. “The Evolution of Biotechnology and Its Impact on Health Care.” Health Affairs 34 (2), 210–19.CrossRefGoogle ScholarPubMed
Feller, Avi, Grindal, Todd, Miratrix, Luke, and Page, Lindsay C., 2016. “Compared to What? Variation in the Impacts of Early Childhood Education by Alternative Care Type.” The Annals of Applied Statistics 10 (3), 1245–85.Google Scholar
Fernald, Anne, Marchman, Virginia A., and Weisleder, Adriana, 2013. “SES Differences in Language Processing Skill and Vocabulary Are Evident at 18 Months.” Developmental Science 16 (2), 234–48.CrossRefGoogle ScholarPubMed
García, Jorge Luis, Heckman, James J., Leaf, Duncan Ermini, and Prados, María José, 2017. “Quantifying the Life-Cycle Benefits of a Prototypical Early Childhood Program.” NBER Working Paper No. 10811. National Bureau of Economic Research, Cambridge, MA.CrossRefGoogle Scholar
Gertler, Paul, Heckman, James, Pinto, Rodrigo, Zanolini, Arianna, Vermeersch, Christel, Walker, Susan, Chang, Susan M., and Grantham-McGregor, Sally, 2014. “Labor Market Returns to an Early Childhood Stimulation Intervention in Jamaica.” Science 344 (6187), 998–1001.CrossRefGoogle Scholar
Giovannetti, Glen T., and Jaggi, Gautam, 2014. “Biotechnology Industry Report 2013: Beyond Borders; Matters of Evidence.” Ernst and Young, London, UK.Google Scholar
Goldin, Claudia, and Katz, Lawrence F., 2008. The Race between Education and Technology. Harvard University Press, Cambridge, MA.Google Scholar
Gomby, Deanna S., Larson, Carol S., Lewit, Eugene M., and Behrman, Richard E., 1993. “Home Visiting: Analysis and Recommendations.” The Future of Children 3 (3), 6–22.Google Scholar
Gordon, Robert J., 2016. The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War. Princeton University Press, Princeton, NJ.Google Scholar
Grantham-McGregor, Sally M., Powell, Christine A., Walker, Susan P., and Himes, John H., 1991. “Nutritional Supplementation, Psychosocial Stimulation, and Mental Development of Stunted Children: The Jamaican Study.” The Lancet 338 (8758), 1–5.CrossRefGoogle ScholarPubMed
Guryan, Jonathan, Hurst, Erik, and Kearney, Melissa, 2008. “Parental Education and Parental Time with Children.” Journal of Economic Perspectives 22 (3), 23–46.Google Scholar
Haggerty, Kevin, Kosterman, Rick, Catalano, Richard F., and Hawkins, J. David, 1999. Preparing for the Drug Free Years. Office of Justice Programs, Washington, DC.Google Scholar
Hart, Betty, and Risley, Todd R., 1995. Meaningful Differences in the Everyday Experience of Young American Children. Paul H. Brookes Publishing, Baltimore, MD.Google Scholar
Hawkins, J. David, Kosterman, Rick, Catalano, Richard F., Hill, Karl G., and Abbott, Robert D., 2005. “Promoting Positive Adult Functioning through Social Development Intervention in Childhood: Long-Term Effects from the Seattle Social Development Project.” Archives of Pediatrics and Adolescent Medicine 159 (1), 25–31.Google Scholar
Heckman, James J., Holland, Margaret L., Makino, Kevin K., Pinto, Rodrigo, and Rosales-Rueda, Maria, 2017. “An Analysis of the Memphis Nurse-Family Partnership Program.” NBER Working Paper No. 23610. National Bureau of Economic Analysis, Cambridge, MA.Google Scholar
Heckman, James J., and Masterov, Dimitriy V., 2007. “The Productivity Argument for Investing in Young Children.” Review of Agricultural Economics 29 (3), 446–93.Google Scholar
Heckman, James J., Moon, Seong H., Pinto, Rodrigo, Savelyev, Peter, and Yavitz, Adam, 2010. “Analyzing Social Experiments as Implemented: A Reexamination of the Evidence from the HighScope Perry Preschool Program.” Quantitative Economics 1 (1), 1–46.Google ScholarPubMed
Heckman, James J., Pinto, Rodrigo, and Savelyev, Peter, 2013. “Understanding the Mechanisms through Which an Influential Early Childhood Program Boosted Adult Outcomes.” American Economic Review 103 (6), 2052–86.Google Scholar
Heckman, James J., Stixrud, Jora, and Urzua, Sergio, 2006. “The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior.” Journal of Labor Economics 24 (3), 411–82.Google Scholar
Hoxby, Caroline M., 2009. “The Changing Selectivity of American Colleges.” Journal of Economic Perspectives 23 (4), 95–118.Google Scholar
Hoxby, Caroline, and Avery, Christopher, 2013. “The Missing ‘One-Offs’: The Hidden Supply of High-Achieving, Low-Income Students.” Brookings Papers on Economic Activity 2013 (1), 1–65.Google Scholar
Hoxby, Caroline, and Turner, Sarah, 2013. “Expanding College Opportunities for High-Achieving, Low-Income Students.” Working Paper. Stanford University, Stanford, CA.Google Scholar
Jacobs, Jane, 1961. The Economy of Cities. Random House, New York, NY.Google Scholar
Kalil, Ariel, Ryan, Rebecca, and Corey, Michael, 2012. “Diverging Destinies: Maternal Education and the Developmental Gradient in Time with Children.” Demography 49 (4), 1361–83.CrossRefGoogle ScholarPubMed
Katz, Lawrence F., and Murphy, Kevin M., 1992. “Changes in Relative Wages, 1963–1987: Supply and Demand Factors.” Quarterly Journal of Economics 107 (1), 35–78.Google Scholar
Klepper, Steven, 2010. “The Origin and Growth of Industry Clusters: The Making of Silicon Valley and Detroit.” Journal of Urban Economics 67 (1), 15–32.Google Scholar
Kline, Patrick, and Walters, Christopher, 2016. “Evaluating Public Programs with Close Substitutes: The Case of Head Start.” Quarterly Journal of Economics 131 (4), 1795–1848.Google Scholar
Kornrich, Sabino, and Furstenberg, Frank, 2013. “Investing in Children: Changes in Parental Spending on Children, 1972–2007.” Demography 50 (1), 1–23.CrossRefGoogle ScholarPubMed
Lawrence, Stacy, and Lahteenmaki, Riku, 2014. “Public Biotech 2013: The Numbers.” Nature Biotechnology 32 (7), 626–32.Google ScholarPubMed
Lécuyer, Christopher, 2006. Making Silicon Valley: Innovation and the Growth of High Tech, 1930–1970. MIT Press, Cambridge, MA.Google Scholar
Lino, Mark, Kuczynski, Kevin, Rodriguez, Nestor, and Schap, TusaRebecca, 2017. “Expenditures on Children by Families, 2015.” Miscellaneous Publication No. 1528-2015. U.S. Department of Agriculture, Center for Nutrition Policy and Promotion, Washington, DC.Google Scholar
Lojek, Bo, 2007. History of Semiconductor Engineering. Springer, New York, NY.Google Scholar
Love, John M., Kisker, Ellen Eliason, Ross, Christine, Raikes, Helen, Constantine, Jill, Boller, Kimberly, Brooks-Gunn, Jeanne, Chazan-Cohen, Rachel, Tarullo, Louisa Banks, and Brady-Smith, Christy, 2005. “The Effectiveness of Early Head Start for Three-Year-Old Children and Their Parents: Lessons for Policy and Programs.” Developmental Psychology 41 (6), 885–901.CrossRefGoogle Scholar
Lowell, Darcy I., Carter, Alice S., Godoy, Leandra, Paulicin, Belinda, and Briggs-Gowan, Margaret J., 2011. “A Randomized Controlled Trial of Child FIRST: A Comprehensive Home-Based Intervention Translating Research into Early Childhood Practice.” Child Development 82 (1), 193–208.Google Scholar
Marchman, Virginia A., and Fernald, Anne, 2008. “Speed of Word Recognition and Vocabulary Knowledge in Infancy Predict Cognitive and Language Outcomes in Later Childhood.” Developmental Science 11 (3), F9–16.Google Scholar
Marx, Matt, Strumsky, Deborah, and Fleming, Lee, 2009. “Mobility, Skills, and the Michigan Non-compete Experiment.” Management Science 55 (6), 875–89.Google Scholar
Mason, W. Alex, Kosterman, Rick, Hawkins, J. David, Haggerty, Kevin P., Spoth, Richard L., and Redmond, Cleve, 2007. “Influence of a Family-Focused Substance Use Preventive Intervention on Growth in Adolescent Depressive Symptoms.” Journal of Research on Adolescence 17 (3), 541–64.CrossRefGoogle Scholar
Moser, Petra, 2016. “Patents and Innovation in Economic History.” Annual Review of Economics 8 (1), 241–58.CrossRefGoogle Scholar
Nelson, Richard R., and Phelps, Edmund S., 1966. “Investment in Humans, Technological Diffusion, and Economic Growth.” American Economic Review 56 (1/2), 69–75.Google Scholar
OECD, 2016. The Survey of Adult Skills: Reader’s Companion, 2nd edition, OECD Skills Studies. OECD Publishing, Paris, https://doi.org/10.1787/9789264258075-en.Google Scholar
Olds, David L., 2006. “The Nurse-Family Partnership: An Evidence-Based Preventive Intervention.” Infant Mental Health Journal 27 (1), 5–25.Google Scholar
Oreopoulos, Philip, Brown, Robert S., and Lavecchia, Adam M., 2017. “Pathways to Education: An Integrated Approach to Helping At-Risk High School Students.” Journal of Political Economy 125 (4), 947–84.Google Scholar
Park, Jisuk, Kosterman, Rick, Hawkins, J. David, Haggerty, Kevin P., Duncan, Terry E., Duncan, Susan C., and Spoth, Richard, 2000. “Effects of the ‘Preparing for the Drug-Free Years’ Curriculum on Growth in Alcohol Use and Risk for Alcohol Use in Early Adolescence.” Prevention Science 1 (3), 125–38.Google Scholar
Piketty, Thomas, 2014. Capital in the Twenty-First Century. Harvard University Press, Cambridge, MA.Google Scholar
Puma, Michael, Bell, Stephen, Cook, Ronna, Heid, Camilla, Shapiro, Gary, Broene, Pam, Jenkins, Frank, Fletcher, Philip, Quinn, Liz, and Friedman, Janet, 2010. Head Start Impact Study: Final Report. U.S. Department of Health and Human Services, Washington, DC.Google Scholar
Putnam, Robert D., 2016. Our Kids: The American Dream in Crisis. Simon and Schuster, New York, NY.Google Scholar
Ramey, Garey, and Ramey, Valerie A., 2010. “The Rug Rat Race.” Brookings Papers on Economic Activity 41 (1), 129–99.Google Scholar
Ramey, Craig T., Sparling, Joseph, and Ramey, Sharon L., 2012. Abecedarian: The Ideas, the Approach, and the Findings. Sociometrics Corporation, Palo Alto, CA.Google Scholar
Reardon, Sean F., 2013. “The Widening Income Achievement Gap.” Educational Leadership 70 (8), 10–16.Google Scholar
Ricciuti, Anne E., St. Pierre, Robert G., Lee, Wang, Parsad, Amanda, and Rimdzius, Tracy, 2004. Third National Even Start Evaluation: Follow-Up Findings from the Experimental Design Study. National Center for Education Evaluation and Regional Assistance, Washington, DC.Google Scholar
Roggman, Lori A., Cook, Gina A., Peterson, Carla A., and Raikes, Helen H., 2008. “Who Drops Out of Early Head Start Home Visiting Programs?” Early Education and Development 19 (4), 574–99.Google Scholar
Romer, Paul M., 1990. “Endogenous Technological Change.” Journal of Political Economy 98 (5), S71–102.Google Scholar
Schweinhart, Lawrence J., 2005. Lifetime Effects: The High/Scope Perry Preschool Study through Age 40. High/Scope Press, Ypsilanti, MI.Google Scholar
Shure, Myrna B., and Spivack, George, 1982. “Interpersonal Problem-Solving in Young Children: A Cognitive Approach to Prevention.” American Journal of Community Psychology 10 (3), 341–56.Google Scholar
Slavin, Robert E., 1978. Using Student Team Learning. The Johns Hopkins Team Learning Project. Johns Hopkins University Press, Baltimore, MD.Google Scholar
Solow, Robert M., 1956. “A Contribution to the Theory of Economic Growth.” Quarterly Journal of Economics 70 (1), 65–94.CrossRefGoogle Scholar
St. Pierre, Robert G., Ricciuti, Anne E., and Rimdzius, Tracy A., 2005. “Effects of a Family Literacy Program on Low-Literate Children and Their Parents: Findings from an Evaluation of the Even Start Family Literacy Program.” Developmental Psychology 41 (6), 953–70.Google Scholar
Truelove, Christiane, 2013. “27th Annual Report: Top 50 Pharma Companies.” MedAdNews 32 (10), 10–11.Google Scholar
Valletta, Robert G., 2017. “Recent Flattening in the Higher Education Wage Premium: Polarization, Skill Downgrading, or Both?” In Hulten, Charles R. and Ramey, Valerie A. (eds.), Education, Skills, and Technical Change: Implications for Future US GDP Growth, 313–56. University of Chicago Press, Chicago, IL.Google Scholar
Von Hippel, Eric, 1994. “‘Sticky Information’ and the Locus of Problem Solving: Implications for Innovation.” Management Science 40 (4), 429–39.Google Scholar
Wagner, Mary M., and Clayton, Serena L., 1999. “The Parents as Teachers Program: Results from Two Demonstrations.” The Future of Children 9 (1), 91–115.Google Scholar
Walker, Susan P., Chang, Susan M., Vera-Hernández, Marcos, and Grantham-McGregor, Sally, 2011. “Early Childhood Stimulation Benefits Adult Competence and Reduces Violent Behavior.” Pediatrics 127 (5), 849–957.Google Scholar
Walsh, Gary, 2014. “Biopharmaceutical Benchmarks 2014.” Nature Biotechnology 32 (10), 992–1000.Google Scholar
Zucker, Lynne, Darby, Michael, and Brewer, Marilynn B., 1998. “Intellectual Human Capital and the Birth of US Biotechnology Enterprises.” American Economic Review 88 (1), 290–306.Google Scholar

Save book to Kindle

To save this book to your Kindle, first ensure no-reply@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×