Chinese university graduates today; English workers circa 1760

by philg

Today’s New York Times carries a story about Chinese university graduates not able to get the high-paying jobs that they expected. Is this news? On page 272 of A Farewell to Alms: A Brief Economic History of the World,Gregory Clark notes that “from 1760 to 1860 real wages in England rose faster than real output per person. The innovators, the owners of capital, the owners of land, and the owners of human capital [what economists call skill and education] all experienced modest rewards, or no rewards, from advances in knowledge.” According to Clark, knowledge workers became comparatively cheap during the Industrial Revolution while farm laborers and unskilled workers enjoyed the biggest increases. Common sense tells us that the more advanced an economy is the more valuable skills should be, but history suggests that the relationship is not simple.

[Real estate enthusiasts will enjoy figure 14.2, graphing real farmland rents per acre in England, 1210-2000. “Real farmland rents peaked in the late nineteenth century, but they have declined since. The rent of an acre of farmland in England currently buys only as many goods as it did in the 1760s. Indeed the real earnings of an acre of land are little higher than in the early thirteenth century.” Think this is distorted because the valuable land in England is all urban now? The total share of land rent of the English economy has declined from 25 percent in 1750 to about 4 percent today.]

3 thoughts on “Chinese university graduates today; English workers circa 1760”

  1. If countries had open borders, I think these young folks would have an easier time finding better jobs. Too bad that free trade applies mostly to goods, not to labor. For instance, countries facing aging population problems could certainly use the surplus of these young college graduate workers. (Language would probably be a barrier at first, but someone who is willing to share “a filthy toilet with dozens of residents” will be willing to learn a new language for better opportunities).

    On a different note, will it always be a given that skills = more income? I find certain kinds of supposedly “unskilled” jobs really hard, i.e. folding white shirts, or doing bedding in a hotel. 10 minutes of that makes my brain fry…could it be that in a distant future, “skilled” labor is in abundance, while there are relatively fewer people willing to do the boring mechanical jobs that are nevertheless very hard to automate? (Paul Krugman had an article speculating on this many years ago, but I couldn’t find the reference quickly after a few Google searches…)

  2. Murali: You raise a good point. Certainly more education does not equal more income for all individuals, e.g., folks with Ph.D.s in English who go on to become college teachers. If they’d gone to plumbing school or the police academy they’d have earned far more than using their Ph.D. (not to mention the lost earnings during the undergrad and grad school years).

    In a democracy, I think it is reasonable to expect at least working-age natives to vote against free trade in labor. If the U.S. labor market were truly a worldwide meritocracy, most of us native-born Americans would be lucky to find work as gardeners. As the population ages, though, I wonder if the political tides will turn. Once I turn 65 and start collecting Medicare it might be nice to have a smart energetic 22-year-old from China come over and pay for it!

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