The Evolution of Education: A Macroeconomic Analysis

Between 1940 and 2000 there has been a substantial increase of educational attainment in the United States. What caused this trend? Using a simple model of schooling decisions, we assess the quantitative contribution of changes in the return to schooling in explaining the evolution of education. We restrict changes in the returns to schooling to match data on earnings across educational groups and growth in aggregate labor productivity. These restrictions imply modest increases in returns that nevertheless generate a substantial increase in educational attainment: average years of schooling increase by 37 percent in the model compared to 23 percent in the data. This strong quantitative effect is robust to relevant variations of the model including allowing for changes in the relative cost of acquiring education. We also find that the substantial increase in life expectancy observed during the period contributed to only 7 percent of the change in educational attainment in the model.educational attainment, schooling, skill-biased technical progress, human capital