Are Good Manufacturing Jobs Bad News for Education?

Here’s a fascinating new working paper from Yale economist David G. Atkin, called “Endogenous Skill Acquisition and Export Manufacturing in Mexico” (abstract here; PDF of an earlier version here). The gist:

This paper presents empirical evidence that the growth of export manufacturing in Mexico during a period of major trade reforms, the years 1986-2000, altered the distribution of education.  I use variation in the timing of factory openings across municipalities to show that school dropout increased with local expansions in export manufacturing. The magnitudes I find suggest that for every twenty jobs created, one student dropped out of school at grade 9 rather than continuing through to grade 12.  These effects are driven by the least-skilled export-manufacturing jobs which raised the opportunity cost of schooling for students at the margin.

It makes sense, of course, that students on the margin might happily abandon school in favor of a good job. But is that necessarily a bad thing? How should a society balance jobs and educational ambition? And who should be thinking harder about this issue — India or China? Or perhaps the U.S.? Here, from today’s Times, is a long article about how the Japanese automaker Nissan created thousands of jobs in the U.S., how perhaps American tech firms might consider doing the same:

For years, high-tech executives have argued that the United States cannot compete in making the most popular electronic devices. Companies like Apple, Dell and Hewlett-Packard, which rely on huge Asian factories, assert that many types of manufacturing would be too costly and inefficient in America. Only overseas, they have said, can they find an abundance of educated midlevel engineers, low-wage workers and at-the-ready suppliers.

But the migration of Japanese auto manufacturing to the United States over the last 30 years offers a case study in how the unlikeliest of transformations can unfold. Despite the decline of American car companies, the United States today remains one of the top auto manufacturers and employers in the world. Japanese and other foreign companies account for more than 40 percent of cars built in the United States, employing about 95,000 people directly and hundreds of thousands more among parts suppliers.


Voice of Reason

I guess it's the age old philosophic argument of whether it makes sense in a society to compensate and divvy up resources based on merit and contribution, or if it makes sense to give better lives to people just because you can, and it wouldn't hurt those who have as much, despite their being no practical reason beyond those people simply living better lives. From a utilitarian and humanist standpoint it makes sense, but from a long-term, "advancing society" standpoint, supply/demand rules.

Dan (Empirical Magazine)

Another issue that pertains to this is the automation of manufacturing work, which could rise significantly in the near-future:

http://empiricalmag.blogspot.com/2012/12/december-excerpt-creative-disruption-by.html

The result, according to this article by John F. McMullen, would be a significant reduction of less-skilled jobs in the manufacturing sector and increased demand for higher-educated workers there.