WWII and Since. Before 1941 1939, Poland 1940, low countries, France, etc US, underutilized industrial capacity Began producing munitions before 1941.

WWII and Since

Before 1941

1939, Poland 1940, low countries, France, etc US, underutilized industrial capacity

Began producing munitions before 1941 Exports, esp. to Britain

Output

High Federal purchase Civil purchase fell Increased production in munitions How did the government allocate the

resources?

Commandeering Tax income and wealth

Income tax Profit 40% of the spending

Borrowing Monetizing the debt

Treasury issued bonds and Fed bought them

Price Control

Office of Price Administration Price ceiling, quantity Problems?

Quality More regulation! 6 page regulation on fruit cakes

Forced upgrades Black market

US economy after WWII

1945-1973 Rapid Growth @ 3% a year 1973-1995 1% 1995-2004 2.5%

Features of Golden Age

Stabilization FDIC Progressive tax rates Unemployment insurance

US leader Free trade (RTA, GATT, etc) Stable Exchange Rate (Bretton Woods) Marshall Plan

Labor relationships Higher education Social safety net Reduced inequality

Until the 70’s Upward social mobility

The Great Migration and the South South: Economic backward Impact of New Deal

Before: low wage economy After: African Americans moved north

What to do? Lure outside investors

Selling of the South

Since the national minimum wage Southern states actively lure industry

Building plant spaces Advertising Tax incentives Loans Research Triangle in NC

Civil Rights Revolution

Discrimination in the workplace Occupation specific

Economic incentives Employers? Were they good? Federal funding Outside capital Textiles: significant discrimination

Education? Endogenous as well!

Economic Impacts

What are the benefits of integration? Efficiency?

Textile employers Others? Education?

Business climate Immigration Black business owners

Revolution in women’s status

Long-term trends Lower fertility Rising labor force participation Higher education level

Contraceptives “endogenous” women’s group supported the

research Divorce rate increases sharply in 80’s

Changes in law (more states allowed unilateral divorce)

Better able to support themselves Many more divorced, expectation and social norm

Labor Force Participation Rate

Female Percentage in College

0

10

20

30

40

50

60

70

1947

1950

1953

1956

1961

1965

1968

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

Female Percentage

Female Percentage in Professional Schools

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

1953-5

4

1957-5

8

1961-6

2

1964-6

5

1967-6

8

1969-7

0

1971-7

2

1973-7

4

1975-7

6

1977-7

8

1979-8

0

1981-8

2

1983-8

4

1985-8

6

1987-8

8

1989-9

0

1991-9

2

1993-9

4

1995-9

6

1997-9

8

1999-2

000

2001-0

2

2003-0

4

Dentistry

Medicine

Law

Changes after 1970’s

Before: Women were enrolled in college but not many

went to work After

Co-ed Choice of majors Professional school enrollment increased

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?

Skilled-biased technical progress Globalization Immigrants Institutional changes

Skilled-biased technical progress College premium went up Why?

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

More international trade U.S. specialize in high-tech industries Raised high-tech wage

Others

Immigrants More unskilled immigrants

Institutional changes Decline of unions Real minimum wage decreased

“flexible” labor market

Tolerance for wage differentials Less regulation than western Europe

US works more Europeans retire early

US works more Longer hours

Inequality and upward mobility, fear of losing job Regulations: US works more because we can!