A Century of Human Capital and Hours

18 Pages Posted: 7 May 2013

See all articles by Diego Restuccia

Diego Restuccia

University of Toronto - Department of Economics

Guillaume Vandenbroucke

Federal Reserve Banks - Federal Reserve Bank of St. Louis

Date Written: July 2013

Abstract

An average person born in the United States in the second half of the 19th century completed 7 years of schooling and spent 58 hours a week working in the market. In contrast, an average person born at the end of the 20th century completed 14 years of schooling and spent 40 hours a week working. In the span of 100 years, completed years of schooling doubled and working hours decreased by 30%. What explains these trends? We consider a model of human capital and labor supply to quantitatively assess the contribution of exogenous variations in productivity (wage) and life expectancy in accounting for the secular trends in educational attainment and hours of work. We find that the observed increase in wages and life expectancy accounts for 80% of the increase in years of schooling and 88% of the reduction in hours of work. Rising wages alone account for 75% of the increase in schooling and almost all the decrease in hours in the model, whereas rising life expectancy alone accounts for 25% of the increase in schooling and almost none of the decrease in hours of work. In addition, we show that the mechanism emphasized in the model is consistent with other trends at a more disaggregate level such as the reduction in the racial gap in schooling and the decrease in the cross‐sectional dispersion in hours.

JEL Classification: E1, I25, J11, O4

Suggested Citation

Restuccia, Diego and Vandenbroucke, Guillaume, A Century of Human Capital and Hours (July 2013). Economic Inquiry, Vol. 51, Issue 3, pp. 1849-1866, 2013. Available at SSRN: https://ssrn.com/abstract=2261571 or http://dx.doi.org/10.1111/j.1465-7295.2012.00497.x

Diego Restuccia (Contact Author)

University of Toronto - Department of Economics ( email )

150 St. George Street
Toronto, Ontario M5S 3G7
Canada

Guillaume Vandenbroucke

Federal Reserve Banks - Federal Reserve Bank of St. Louis ( email )

411 Locust St
Saint Louis, MO 63011
United States
+1 314 444 8717 (Phone)

HOME PAGE: http://www.guillaumevdb.net/

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