Discussion

Abstract

DaronAcemoglu contextualized the authors’ paper as part of an ongoing debate about the origins of intercohort trends in labor market outcomes. He argued that differences across education groups have been studied extensively,whereas differences across cohorts are less understood.He contrasted two views on the subject. According to the first one, which he labeled the “early labor view,” intercohort trends stem from differences in protections and unionization across cohorts. The second view, which Acemoglu labeled the “Card-Lemieux (2001) view” (David Card and Thomas Lemieux [“Can Falling Supply Explain the Rising Return to College for Younger Men? A Cohort-Based Analysis,” Quarterly Journal of Economics 116, no. 2 (2001): 705–46]), imputes these trends to differences in educational attainments across cohorts. Acemoglu downplayed the importance of the first view. He suggested instead that a decrease in the relative supply of educated workers across cohorts is the most plausible explanation for the rise in the skill premium observed in the data. He noted that college graduation rates rose steadily for cohorts born before 1950, but educational attainments stagnated or even declined afterward. Acemoglu argued that the literature still does not have a good understanding of the source of this structural break. The authors agreed that the decline in educational achievements across cohorts is striking, especially because the skill premium rose over the relevant period. They would not speculate about the reasons underlying this trend but suggested that skill-biased technical changes might also have played a role for the rising skill premium. Valerie Ramey followedupon the subject andoffered a tentative explanation for the decline in educational achievements across cohorts. She highlighted the role of expectations for investment in human capital. She noted that the 1960s cohort (studied in the paper) turned 18 in the late 1970s, when the college premiumwas low and strong unions guaranteed