Instituto de Economía

Abstract: This paper contributes to the empirical literature on the impact of human capital on technology adoption and the production structure of the economy by using census micro data for US cohorts born between 1915 and 1939. We test the impact of secondary and tertiary schooling in the US at the individual and state-cohort level on R&D and TFP growth across industries in 1970. While we follow the literature in using the variation in the timing of compulsory schooling laws across states to instrument secondary schooling, we propose a novel instrument for tertiary enrollment. In particular, we exploit, as in Acemoglu, Autor and Lyle (2004), the differences across states and cohorts in World War II mobilization rates. While Acemoglu, Autor, and Lyle (2004) used this variation as an exogenous shift in female labor supply, we exploit the fact that WWII veterans were benefited by the GI Bill Act (1944), which granted them free college education once they were discharged from service. This provides a clean source of variation in the costs of attending college, which allows us to exploit differences in college enrollment across states and cohorts.