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Human Capital: The Year You Were Born

Feb 26, 2013 • Behavioral Economics, Households, Labor, Macroeconomic Measurement, Uncategorized • 206 Views    No Comments

Your human capital might be affected by your birth date.

In Outliers, Malcolm Gladwell suggests that children born during the Great Depression had an advantage. Economic contraction meant couples had fewer babies. A cohort with fewer children, 1930s babies enjoyed smaller classes and better teachers. Because they were unable to get hired by colleges, over qualified teachers swamped the high schools. As a result, depression babies were more likely to be professionally successful.

Fast forward to the Great Recession. One group of adults called the boomerang generation moved back with their parents. Facing financial insecurity, others also postponed marriage and put off parenthood.

By 2011, the birth rate per 1,000 had plummeted. While the map below is for 2010, it reflects a decline in birth rates that began with the Great Recession, Dec. 2007-June 2009.

Returning to the Gladwell hypothesis, we can ask if the Great Recession will echo the Great Depression. For those who were born from 2008-2011, will their human capital be better nurtured through smaller classes and better teachers?

Births Per 1,000, 2010

Births Per 1,000 in 2010

Births per 1,000

Sources and Resources: A page turner of ideas and facts, Outliers is the wonderful book that introduces a slew of thought provoking hypotheses about success. It took me to statistical web sites here, here and here for my birth rate stats and map. You might also want to look at this Pew Research report.

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