Jewish Economies: Development and Migration in America and Beyond ? Volume I: The Economic Life of American Jewry

Published by EH.Net (August 2012)

Simon Kuznets, Jewish Economies: Development and Migration in America and Beyond ? Volume I: The Economic Life of American Jewry (edited by Stephanie Lo and E. Glen Weyl). New Brunswick, NJ: Transaction Publishers, 2012. liv + 239 pp. $50 (hardcover), ISBN: 978-1-4128-4211-2.

Reviewed for EH.Net by Daniel A. Schiffman, Department of Economics and Business Administration, Ariel University Center.

Simon Kuznets (1901-1985), the 1971 Nobel Laureate in Economics, is renowned for his contributions to development economics and national income accounting. This book documents a less well known aspect of Kuznets’ career ? his pioneering contributions to Jewish economic history.

This is the first volume of a two-volume set. The set consists of six papers, four of which were previously unpublished, published in Hebrew, or published in abridged form. The contents of Volume I are as follows:
1. “Preface” (Lo), a brief description of all six papers;
2. “Introduction: Simon Kuznets, Cautious Empiricist of the Eastern European Jewish Diaspora,” (Weyl), a forty-page essay which places the six papers within the context of Kuznets’ life and work;
3. “Economic Structure and Life of the Jews,” a draft that was published in abridged form in 1961, by the Jewish Theological Seminary in New York;
4. “Economic Structure of U.S. Jewry: Recent Trends,” a lecture delivered at the home of Israel’s President, originally published in Hebrew;
5. “Economic Growth of U.S. Jewry,” an unfinished, previously unpublished manuscript.

In these papers, Kuznets describes the economic transformation of world Jewry in the twentieth century, with an emphasis on immigration, human capital accumulation, occupational structure and income distribution. Readers who are familiar with Kuznets will recognize his unique methodology, which is characterized by careful definition of concepts, meticulous empirical analysis and fact-based theoretical insights. Kuznets’ findings include the following:
a. Jews have paid a heavy economic price to preserve their cohesion and identity.
b. Discrimination against Jews is highly irrational.??
c. Waves of immigration generate significant inequality, accompanied by cultural gaps, between veteran immigrants and newer arrivals.
d. In a pre-World War II sample of 12 nations, Jews were overrepresented in trade and finance and (to a lesser extent) industry and handicrafts. Jews were underrepresented in agriculture, transportation, communications and personal services.
e. In the early 1950’s, Israel integrated its immigrants by allowing them to consume more than they produced. This policy, combined with a high rate of investment in physical capital, necessitated large capital inflows from abroad.?
f. In 1957, American Jews were highly urbanized and educated, relative to the general U.S. population. Between 1910 and 1957, Jewish males shifted from industrial occupations to professional and technical occupations. In the 1950’s and 1960’s, Jewish females married later and had a lower birth rate, relative to the general population. Jewish females had a high labor force participation rate before marriage, but tended to leave the labor force after marriage. The distribution of income among Jews had a higher mean, greater rightward skewness and greater inequality than the general distribution of income.?

Why did Simon Kuznets devote time and energy to the study of Jewish economic history? Kuznets emigrated from Russia to the U.S. in 1922. As a secular Jew and staunch Zionist, he affirmed his Jewish loyalties by studying Jewish economic history and by promoting economic research at the Hebrew University in Jerusalem. However, he was ambivalent about his Jewish-oriented writings. In a 1973 letter, he declined Martin Feldstein’s proposal to disseminate “Economic Growth of U.S. Jewry” as a Harvard economics department working paper. Kuznets explained that his Jewish-oriented writings were less than fully objective, because the topics reflected his “interests and associations as a Jew.”

What motivated Weyl and Lo to edit Jewish Economies? In 2007, Weyl, who is now an economic theorist at the University of Chicago, wrote a term paper on Kuznets for an undergraduate history course at Princeton. Weyl consulted Kuznets’ personal papers and interviewed his children, Paul Kuznets and Judith Stein. After completing his Ph.D. in economics at Princeton in 2008, Weyl joined the Harvard Society of Fellows, where he collaborated with research assistant Stephanie Lo (currently an analyst at DC Energy). Weyl explains that he is drawn to Kuznets by virtue of their common background and challenges. Like Kuznets, Weyl was born into a secular Jewish family; like Kuznets, Weyl strives to create the proper balance between universalism and Jewish identity.

Weyl’s introduction is very enlightening. Using archival material and interviews, Weyl uncovers new facts about Kuznets’ personal and professional lives. Weyl also ventures into the realm of intellectual biography: He explores the connection between Kuznets’ background and his economic thought, and demonstrates the existence of important parallels between Kuznets’ general and Jewish-oriented works. For example:
? Kuznets emphasized the role of culture and institutions in Jewish economic life. This parallels his emphasis on culture and institutions in development (which was highly unconventional in the 1950’s).
? Kuznets hypothesized that over time, income inequality among Jewish immigrants would rise and then fall. This parallels the famous Kuznets curve, which posits an inverted-U relationship between development and income inequality.
? In the Middle Ages, European Jews were excluded from all professions except moneylending. This historical fact may have inspired Kuznets to assert (in Income from Independent Professional Practice, coauthored with Milton Friedman) that occupational licensure reduces competition.
? Kuznets saw immigration as a leading factor in Israel’s economic development. He also recognized the disastrous effect of U.S. immigration restrictions in the pre-Holocaust years. Not surprisingly, Kuznets’ general work is strongly pro-immigration.

Weyl suggests that some of Kuznets’ most famous (general) economic insights were inspired by his Jewish-oriented works. Unfortunately, conclusive evidence is lacking; Kuznets deliberately concealed his motivations, and maintained a strict separation between his general and Jewish-oriented works.

I have two minor quibbles with Jewish Economies. First, there is a small but growing post-Kuznets literature on Jewish economic history; contributors include Barry Chiswick, Carmel Chiswick, Maristella Botticini, Zvi Eckstein and Cormac ? Gr?da. Weyl and Lo do not bring this literature to the attention of the reader. Second, the introduction is marred by occasional typographical errors and incorrect cross-references.

In conclusion, Jewish Economies is an important scholarly contribution. It should be required reading for specialists in the fields of economic development, human capital and history of economic thought. Weyl and Lo have contributed to the economics literature in three ways: They have collected Kuznets’ virtually forgotten writings on Jewish economic history, revealed previously unknown aspects of Kuznets’ identity and worldview, and demonstrated important parallels between Kuznets’ general and Jewish-oriented works. Hopefully, the publication of Jewish Economies will stimulate further research on Jewish economists of the twentieth century.

Daniel A. Schiffman is a lecturer in economics at Ariel University Center in Israel. He specializes in economic history and history of economic thought. He has published articles on Jewish monetary thought and is a contributor to the Oxford Handbook of Judaism and Economics (2010).? E-mail: daniels@ariel.ac.il

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