The Declining Fortunes of the Young Since 2000

by on June 4, 2014 at 12:49 pm in Economics, Education | Permalink

That is a new piece in the May AER by Paul Beaudry, David A. Green, and Benjamin M. Sand, here is the clincher scary paragraph:

The data reveal a clear break in 2000.  Between 1992 and 2000, each successive entry cohort has a higher share in cognitive occupations at the outset of their working lives, with the proportion increasing by 0.1 between the 1994 and 1998 cohorts.  After 2000, with the exception of the difference between the 2004 and 2006 entry cohorts, each successive cohort has a lower share in these occupations, with the share at entry for the 2010 cohort being approximately the same as for the 1990 cohort.  Given all the attention that has been paid to growing demand for cognitive skills, this complete reversal is striking.

Do you know of an ungated version?  Here is a related Brookings piece of research (pdf).  Here is a related piece by Acemoglu, Auor, Dorn, Hanson, and Price.

dearieme June 4, 2014 at 1:05 pm

(i) The proportion has declined since 2000, they say, but how about the absolute numbers? Can we sort numerator from denominator?
(ii) How about the number of “cognitive occupations” in total (in other words, not only those being entered by the young)?
(iii) It’s all Slick Willie’s fault.

Jason June 4, 2014 at 2:04 pm

Look at the second graph here: http://www.governing.com/blogs/by-the-numbers/college-enrollment-decline-demographic-data-analysis.html. There was a large bump up in college entrance in the mid-1990′s. Those cohorts would have graduated around 2000. There is a potential quality and a supply explanation to reconcile the AER paper’s findings and the attention to the growing demand for cognitive skills. Depending on what was driving that bump, the marginal student entering after the bump was also potentially overall less prepared for college, and may not have been able to make up the ground by graduation to compete as well for cognitive jobs post-graduation. In addition, it is unlikely that there was a similarly timed bump in cognitive job opportunities that match the talent level of these students. Thus the denominator in the proportion of college educated individuals entering cognitive jobs is growing in terms of number of college graduates, while the numerator for remains constant. If at the same time the denominator in the proportion of cognitive jobs filled is growing faster than the supply of able college graduates, there would still be a perceived shortage.

I think this related to the current debate on the “value” of higher education. The question being can colleges and universities take relatively lower quality inputs and convert them to high quality workers to meet the demand for the cognitive skill based workforce?

Michael Cerny June 4, 2014 at 8:26 pm

http://www.nytimes.com/2014/05/18/magazine/who-gets-to-graduate.html?_r=0 provides a good overview of work being done to try and take students who traditionally drop out of college and convert them into good students.

Justin June 4, 2014 at 2:13 pm

I haven’t looked at the paper, but surely this is explained by the overheated job market of the late 1990′s? I’d guess that 1990 and 2010 are the norms.

gwern June 4, 2014 at 5:09 pm

So, you think it took a decade (“each successive cohort has a lower share in these occupations, with the share at entry for the 2010 cohort”) for *new* workers (“entry cohort”) to see their ‘cognitive’ (not just IT) employment decline to the true rate after the dot-com bubble burst in 2000? As in, you think employers in 2009 were still being fooled by the excesses of 1999 into hiring kids for cognitive employment?

Doug June 4, 2014 at 2:17 pm

Aren’t young Americans much more diverse than the overall work force? Someone should break down by race and see if the decline is across the board, or simply caused by an increase share of races that has low cognitive participation to begin with.

Sean June 4, 2014 at 2:23 pm

By 2001, the Y2K problem was solved.

mulp June 5, 2014 at 3:49 pm

Y2K problems were solved before 2000 given the few problems in Jan 2000

Tony O'Connor June 4, 2014 at 2:48 pm
Bill June 4, 2014 at 3:07 pm

In political economic terms also known as the Bush Effect.

TMC June 4, 2014 at 7:44 pm

Recession started under Clinton.

Bill June 5, 2014 at 1:43 pm

No, just poor memory. Look it up.

Bill June 5, 2014 at 1:49 pm

TMC, ”

“The NBER’s Business Cycle Dating Committee has determined that a peak in business activity occurred in the U.S. economy in March 2001. A peak marks the end of an expansion and the beginning of a recession. The determination of a peak date in March is thus a determination that the expansion that began in March 1991 ended in March 2001 and a recession began [1]”

Clinton left office on Jan 20, 2001. Peak of economic activity was March 2001.

mulp June 5, 2014 at 9:05 pm

Specifically the job killing tax cut after job killing tax cuts that Bush and conservatives kept pushing to create new jobs after the job losses of previous tax cuts.

Note that the 90s started off with the tax hikes that lost HW Bush his reelection plus the Clinton tax hikes that lost Democrats control of the Congress for 12 years. For six years, Clinton had to shutdown government to prevent Newt from forcing job killing tax cuts on the nation.

He did agree to deregulation and tax incentives for asset price inflation and promoting ponzi schemes like pets.com – websites being the new stamps of Ponzi. But all those dot.bomb IPOs involved no real jobs or workers because they were all money for nothing schemes.

But when Bush and the Republicans got to implement their free lunch economic policies – tax cuts that pay for themselves, easy debt that makes you rich, asset price inflation even as capital assets depreciate, lower wages to make workers better off by going into the debt just to eat and then get on welfare – we have universal agreement that its all Obama’s fault because he hiked taxes in 2001.

roadrunner June 4, 2014 at 4:04 pm

If increased immigration of unskilled labor is skewed to the young, this will cause the propects of the young to decline in greater proportion to older folks.

dirk June 4, 2014 at 5:02 pm

uh. Remember the tech bubble? From 1994 to 1998, tech companies wanted warm bodies. Comp Sci majors were getting hired before they finished their sophomore years. As the tech industry matured (and valuations collapsed) only the high skilled became wanted. If you missed the bubble, you missed a big opportunity to become highly skilled.

BC June 4, 2014 at 6:07 pm

Isn’t the simplest explanation that Generation X is the smartest generation in history?

Meno June 9, 2014 at 6:31 am

Those speaking of this as a reaction to the tech bubble bursting are wrong. Demand for IT professionals has increased. But those jobs were not outsourced in 1999 and are now (by the millions), and everything bloody else is decreasing.

Moreover employers are not looking for new skills now the way they were in ’99. Us old farts are seen as more valuable compared to the young than the old farts were compared to us 15 years ago. That may have something to do with when computerisation of most professions occurred.

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