October 1999, Vol. 122, No. 10
Précis
Steadier
GDP growth
The
parking perk
Returns to education in the early 20th century
Since 1984, the quarterly gross domestic product (GDP) growth time series has been only half as volatile as it was in the preceding 25 years, according to an analysis in the Federal Reserve Bank of New York’s Current Issues in Economics and Finance. Margaret M. McConnell, Patricia C. Mosser, and Gabriel Perez Quiros report that "the growth rates of all the major components of GDP have followed a steadier course, with the most marked reductions in volatility occurring in residential investment and trade." Once the authors took the share of each component in measures of economic growth into account, however, they found that the components most responsible to the steadier pace of growth over the past 15 years were inventory investment and consumer spending.
Further research demonstrated that the drop in volatility could not be simply traced back to the recent remission in the number and severity of recessions. Therefore, the authors were inclined to suggest that structural, regulatory, and institutional changes have been steadying influences on housing markets, foreign trade, and inventory management. In particular, they feel that improved inventory management, as indicated by such measures as a 33-percent decline in the average lead time for ordering production materials, has allowed firms to react more quickly to unexpected changes in demand.
In 1991, the BLS Employee Benefit Survey reported that roughly 88 percent of full-time employees at medium and large private establishments were eligible for free or subsidized parking as a benefit. The impact of relaxed zoning provisions concerning parking availability were the subject of a recent case study, "Office Development, Parking Management, and Travel Behavior: The Case of Midtown Atlanta," by Erik Ferguson was published in the Journal of Transportation and Statistics.
The zoning change in question involved the elimination of the minimum parking space requirements for new buildings in redevelopment zones called Special Public Interest Districts (SPID). Somewhat unexpectedly, however, Ferguson found that there was no discernable difference in the number of parking spaces created by developments within the SPIDs and those outside the special zones. Also, employees within the special districts were more than twice as likely to receive free parking from their employers and their parking space was more likely to be onsite than was the case for workers at buildings outside the special public interest districts.
One of the hypothetical effects of relaxing the parking-space construction requirements in special zones would have been to encourage alternative methods of travel to work. However, workers within the SPIDs were no more likely to use an alternative to driving alone as a regular mode of transportation. In a regression analysis, Ferguson found, in fact, "There was no statistically significant relationship between building location [in or out of a SPID] and mode choice." He concludes that the special zoning had been more effective in promoting office projects in proximity to Atlanta’s MARTA rail stations than promoting use of the rail system itself. Likewise, the parking provisions of the special public interest districts appeared to have had more success in reducing "spillover" parking than inducing workers to change their choice of travel mode for their commuting.
Returns to education in the early 20th century
How valuable was an additional year of education early in this century? In a new study that uses data from the Iowa State Census of 1915, Claudia Goldin and Lawrence F. Katz found that there were substantial returns to an additional year of high school or college in 1915.
Goldin and Katz presented their findings in Working Paper 7217 from the National Bureau of Economic Research, "Education and Income in the Early 20th Century: Evidence from the Prairies." Their study is unique because they estimate returns to education before 1940 with a large sample of both men and women who were employed in various sectors and occupations. The 1940 U.S. Census of Population was the first national census to ask about education and earnings, so there is limited information available for earlier years.
For their analysis, Goldin and Katz utilized a sample of nearly 60,000 individuals from the Iowa State Census of 1915 (a 1-in-40 sample). The State Census collected information on age, sex, educational attainment, occupation, and income, as well as other items. Iowans in 1915 were apparently ahead of their time in educational attainment—they had the same average years of education (among 25-to-59-year olds) that the Nation had in 1940.
Goldin and Katz‘s analysis showed sizable returns to education for both men and women. An additional year of high school or college increased income of men by about 10 percent in Iowa in 1915, according to their estimates. For young unmarried women, the return to a year of high school was also 10 percent, and for this group, the return to a year of college was 15 percent.
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