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WWII and Since
Before 1941
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1939, Poland
1940, low countries, France, etc
US, underutilized industrial capacity
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Began producing munitions before 1941
Exports, esp. to Britain
Output
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High Federal purchase
Civil purchase fell
Increased production in munitions
How did the government allocate the
resources?
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Commandeering
Tax income and wealth
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Income tax
Profit
40% of the spending
Borrowing
Monetizing the debt
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Treasury issued bonds and Fed bought them
Price Control
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Office of Price Administration
Price ceiling, quantity
Problems?
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Quality
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More regulation! 6 page regulation on fruit cakes
Forced upgrades
Black market
US economy after WWII
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1945-1973 Rapid Growth @ 3% a year
1973-1995 1%
1995-2004 2.5%
Features of Golden Age
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Stabilization
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FDIC
Progressive tax rates
Unemployment insurance
US leader
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Free trade (RTA, GATT, etc)
Stable Exchange Rate (Bretton Woods)
Marshall Plan
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Labor relationships
Higher education
Social safety net
Reduced inequality
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Until the 70’s
Upward social mobility
The Great Migration and the South
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South: Economic backward
Impact of New Deal
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Before: low wage economy
After: African Americans moved north
What to do?
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Lure outside investors
Selling of the South
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Since the national minimum wage
Southern states actively lure industry
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Building plant spaces
Advertising
Tax incentives
Loans
Research Triangle in NC
Civil Rights Revolution
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Discrimination in the workplace
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Occupation specific
Economic incentives
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Employers? Were they good?
Federal funding
Outside capital
Textiles: significant discrimination
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Education? Endogenous as well!
Economic Impacts
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What are the benefits of integration?
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Efficiency?
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Textile employers
Others?
Education?
Business climate
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Immigration
Black business owners
Revolution in women’s status
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Long-term trends
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Lower fertility
Rising labor force participation
Higher education level
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Contraceptives
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“endogenous” women’s group supported the
research
Divorce rate increases sharply in 80’s
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Changes in law (more states allowed unilateral
divorce)
Better able to support themselves
Many more divorced, expectation and social norm
Labor Force Participation Rate
2004
2001
1998
1995
1992
1989
1986
1983
1980
1977
1974
1971
1968
1965
1961
1956
1953
1950
1947
Female Percentage in College
70
60
50
40
Female Percentage
30
20
10
0
19
53
19 -54
57
19 -58
61
19 -62
64
19 -65
67
19 -68
69
19 70
71
19 -72
73
19 -74
75
19 -76
77
19 -78
79
19 -80
81
19 -82
83
19 -84
85
19 -86
87
19 -88
89
19 -90
91
19 92
93
19 -94
95
19 -96
19 97-9
99 8
-2
0
20 00
01
20 -02
03
-0
4
Female Percentage in Professional Schools
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
Dentistry
Medicine
Law
Changes after 1970’s
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Before:
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Women were enrolled in college but not many
went to work
After
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Co-ed
Choice of majors
Professional school enrollment increased
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Social norms and beliefs: women rejected from
professional schools because they would not work
Women did not apply in the first place
Inequality
Rise in Inequality
Explanations?
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Skilled-biased technical progress
Globalization
Immigrants
Institutional changes
Skilled-biased technical progress
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College premium went up
Why?
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Exogenous innovation?
New technologies that required more skilled labor,
thus demand for these workers increase
So called “skilled-biased” technical progress
Could be “endogenous”
Globalization
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More international trade
U.S. specialize in high-tech industries
Raised high-tech wage
Others
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Immigrants
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More unskilled immigrants
Institutional changes
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Decline of unions
Real minimum wage decreased
“flexible” labor market
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Tolerance for wage differentials
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US works more
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Less regulation than western Europe
Europeans retire early
US works more
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Longer hours
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Inequality and upward mobility, fear of losing job
Regulations: US works more because we can!