Working Paper: NBER ID: w11457
Authors: Richard B. Freeman
Abstract: This paper develops four propositions that show that changes in the global job market for science and engineering (S&E) workers are eroding US dominance in S&E, which diminishes comparative advantage in high tech production and creates problems for American industry and workers: \n (1) The U.S. share of the world's science and engineering graduates is declining rapidly as European and Asian universities, particularly from China, have increased S&E degrees while US degree production has stagnated. \n 2) The job market has worsened for young workers in S&E fields relative to many other high-level occupations, which discourages US students from going on in S&E, but which still has sufficient rewards to attract large immigrant flows, particularly from developing countries. \n 3) Populous low income countries such as China and India can compete with the US in high tech by having many S&E specialists although those workers are a small proportion of their work forces. This threatens to undo the "North-South" pattern of trade in which advanced countries dominate high tech while developing countries specialize in less skilled manufacturing. \n 4) Diminished comparative advantage in high-tech will create a long period of adjustment for US workers, of which the off-shoring of IT jobs to India, growth of high-tech production in China, and multinational R&D facilities in developing countries, are harbingers. \n To ease the adjustment to a less dominant position in science and engineering, the US will have to develop new labor market and R&D policies that build on existing strengths and develop new ways of benefitting from scientific and technological advances in other countries.
Keywords: No keywords provided
JEL Codes: G0; I2; F0; J0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| U.S. share of the world’s SE graduates is rapidly declining (F62) | diminishing comparative advantage in high-tech production (F12) |
| worsening job market for young workers in SE fields (F66) | discouraging U.S. students from pursuing SE careers (J65) |
| populous low-income countries like China and India can now compete with the U.S. in high-tech industries (O14) | threatening traditional North-South trade pattern (F12) |
| diminished comparative advantage in high-tech (F12) | prolonged adjustment period for U.S. workers (J68) |
| influx of foreign SE graduates (F22) | threatening U.S. comparative advantage in high-tech production (L63) |