Birthquake: The Baby Boom and Its Aftershocks, by Diane J. Macunovich. Chicago and London: University of Chicago Press. 2002. Cloth, ISBN 0226500837. 314 pages.
Diane Macunovich studied with Richard Easterlin at University of Southern California (USC); her book presents a series of studies which critique, extend, and modify aspects of the "Easterlin hypothesis" that "relative cohort size" (RCS) is an important influence on the fortunes of a birth cohort, including its "relative earnings" (RE). RCS is the ratio of the size of a birth cohort of young adults to that of its parents' generation; RE is the ratio of its earnings and income to that of its parents' generation. Previous work in this tradition demonstrated that the increase in the RCS of young males born during the baby boom (1946-1964) was a powerful influence on the decline in their relative (and absolute) earnings twenty years later (in the late 1960s to early 1980s), as well as on other variables. That work, however, had also predicted that the relative earnings of the smaller cohorts born from the late 1960s through the early 1980s should have had higher relative earnings--which didn't happen.
Macunovich's version of the Easterlin hypothesis is richer and more complex; she includes and attempts to measure the importance of historical factors such as the Vietnam War and of institutional factors such as labor market organization and regulation, degrees of openness to immigration, trade and capital flows, financial system and industrial structure, stabilization policy, access to education, and cultural attitudes toward the roles of women in society. Although the book focuses on the U.S. experience, there is some analysis of the degree to which the Easterlin hypothesis is valid in other countries as well. Birthquake presents statistical and econometric evidence that her version of the Easterlin model statistically "explains" the behavior of many economic and sociological variables quite well, including the failure of RE to rise for the "baby bust" generation that followed the boomers. Changes in RCS appear to be an important factor in influencing economic and social behavior.
Macunovich argues that the changes in the age structure of a population, especially changes in the RCS of young adults entering the labor force, should have first, second, and third order effects; these effects are seen as the result of "crowding mechanisms" operating within the labor market, the educational...