Productivity, Education and Changes in the Labor Force

W.H. Gruber MIT Thesis, 1965

 

There is strong evidence of a mismatch between skill in the U.S. labor force and higher standard education to achieve employment. Dr. Gruber’s MIT PhD dissertation, “Productivity, Education, and Changes in Labor Force,” published in 1965 provided strong support for the new standard of educational competence that was predicted and well documented over five decades ago. Dr. Gruber's research now provides guidance on current policy issues affecting the U.S. economy, including the shrinking U.S. middle class.

 

Abstract 

 

This study has attempted to determine what statistical evidence exists for the commonly held belief that productivity increases during the postwar period have shifted the occupational structure of the labor force away from blue collar employment and toward white collar occupations that tend to require above average education attainment. 

This thesis has quantified the sequence from productivity to industrial sector changes to occupational structure shifts to the relationship between educational attainment and the change in the occupational structure of employment. The last stage of the research was an attempt to relate the sequence from productivity to the relationship of employment with educational attainment to the question of whether structural unemployment had worsened during the postwar period. The period of analysis of this study was 1948-1962, and it was emphasized that this research represented a study of a historical period… 

It was found in Chapter II that increases in productivity during the postwar period were faster than those of the long-run experience from 1899 to 1948. Those sectors of the economy with faster increases in productivity tended to be those sectors of the economy with smaller increases in employment. This resulted in employment toward the non-goods sectors of the economy.

These industrial sector shifts were related to shifts in the occupational structure in Chapter III. It was found that the occupational structure evolved toward the white collar occupations more consistently and at a faster rate during the postwar period than was the case in the longer run period, 1900-1950. The relationship between the industrial and occupational structures resulted from the fact that the goods sectors are predominantly blue collar in employment and the non-goods sectors are predominantly white collar… Two primary causes were quantified: the shift from goods to non-goods employment and the shift from blue collar to white collar employment within the goods and on-goods sectors. 

Chapter IV related the shifts in the occupational structure to the tendency of some occupations to utilize personnel with higher education attainment than other occupations. The question of whether the structure of the supply of labor had adjusted rapidly enough to the shift in the demand for labor was than examined through an analysis of changes in the structure of labor force participation and unemployment rates. It was found that the position of members of the population with low levels of educational attainment had deteriorated over time in the postwar period. This group became a smaller proportion of the labor force over time, however, and it was therefore found that the increase in the total rate of unemployment since 1957 could not be explained by worsening of structural difficulties. This led to the conclusion that efforts were required to alleviate the problems that had become more serious for members of the population with low levels of education, but that this need for specific structural activities did not mean that there was not ample room for aggregate demand policies. It was found that the debate over whether structural unemployment had worsened could be largely resolved through the proper speciation of the problem under consideration.

© 2019 William H. Gruber