Robert Merton Solow is a Nobel Laureate in Economic Sciences who developed a mathematical model for economic growth. He based his model on the previous Harrod-Domar model, but made considerable changes to it. This distinction stemmed from Solow’s assumption that full employment could be attained by modifying workers’ salaries. His notion was diametrically opposed to the former belief that the economy was in dire straits. He quickly followed up with another hypothesis, claiming that labor and capital were not the only two components essential for economic progress, as economists had previously assumed. If the rate increase is to be assessed in real terms, he claims that a third component must be taken into account. The ‘Solow residual,’ which may be linked to the technological modifications necessary for sustainable economic growth, is a factor. He also devised a new model that prioritized new capital above old capital, depending on the technologies available at the time. More technical advancements might be made with the addition of more cash. His publications on economic growth caused a significant shift in economists’ ideas on the realities of economic growth at the time.
Childhood and Adolescence
Robert M. Solow was born on August 23, 1924, in Brooklyn, New York, to a Jewish family. He was the middle kid in a family of three. He was the youngest of two sisters. Both of his parents were children of immigrants who had to work as soon as they graduated from high school. His father, Milton Henry Solow, had an international fur company, and his mother, Hannah Gertrude Sarney, was a schoolteacher. He was the first generation in his family to go to college.
He attended public schools in New York City for his early education and excelled in his studies. At the age of 16, he was awarded a scholarship at Harvard College to study.
In 1940, Solow enrolled at Harvard College, where he originally studied sociology, anthropology, and rudimentary economics. At the age of 18, he dropped out of university and enlisted in the Army Signal Corps to fight in World War II, serving in North Africa, Sicily, and Italy. Solow returned to Harvard University as a research assistant under Wassily Leontief after being dismissed from the Armed Forces when the war ended in 1945. He created the first set of capital-related coefficients to be used in Leontief’s input-output model.
He graduated from Harvard University with a B.A. in economics in 1947 and an M.A. in 1949. He spent a year studying statistics at Columbia University from 1949 to 1950, owing to a revived interest in statistics and probability models. During this time, he continued to work on his dissertation thesis and graduated from Harvard University with a Ph.D. in economics in 1949.
Career of Robert Solow
He was hired as an Assistant Professor in the Economics Department at the Massachusetts Institute of Technology in 1950 after being offered the position in 1949. He taught econometrics and statistics classes there. In 1950, he created a mathematical model that demonstrates how numerous elements might work together to provide long-term economic prosperity for the country. He demonstrated, contrary to popular perception, that technological advancement, rather than an increase in capital or labor, delivers a greater boost to the economy.
His interest in macroeconomics progressively shifted, and he collaborated with Samuelson on the ‘Von Neuman growth theory’ in 1953, the ‘theory of capital’ in 1956, the ‘linear programming’ theory in 1958, and the ‘Phillips curve’ in 1960.
In 1958, he was promoted to full professor, and in 1995, he was promoted to professor emeritus at M. I. T. He served as a senior economist for the ‘Council of Economic Advisers’ during the John F. Kennedy administration, from 1961 to 1962, and was a consultant for the council from 1962 to 1968. From 1964 to 1965, he served on President Lyndon B. Johnson’s ‘Committee on Technology, Automation, and Economic Progress.’
From 1968 to 1970, he was a member of President Nixon’s ‘Commission on Income Maintenance.’ He was a director of the Boston Federal Reserve Bank from 1975 to the present, and its chairman for the final year. In 1979, he was elected president of the ‘American Economic Association.’
He was a co-founder of the ‘The Cournot Foundation,’ a non-profit organization that funded postdoctoral programs, established co-disciplinary chairs, and organized sabbaticals for notable scholars. He went on to become the Chairman of I.S.E.O., an Italian non-profit cultural organization that organizes summer schools and international conferences. He also became a trustee of the ‘Economics for Peace and Security’ organization.
Major Projects of Robert Solow
Robert M. Solow’s first major publication was a 1956 piece titled “A Contribution to the Theory of Economic Growth.” In 1958, he published his second piece, ‘Technical Change and the Aggregate Production Function,’ which he co-authored with Paul Samuelson and Robert Dorfman, and in 1963, he released his third book, ‘Capital Theory and the Rate of Return.’ In 1967, he authored ‘The New Industrial State of Son of Affluence.’
Achievements & Awards
In 1961, the ‘American Economic Association’ presented Robert M. Solow with the ‘John Bates Clark Award’ for finest economist under the age of forty. In 1987, he was awarded the Nobel Prize in Economic Sciences. He received the ‘National Medal of Science’ in 1999. In 2011, he received an honorary D.Sc. degree from ‘Tufft’s University.’
The ‘2014 Presidential Medal of Freedom’ was bestowed to him.
Personal History and Legacy
After returning from WWII, Robert M. Solow married Barbara Lewis in 1945. From their marriage, they had two boys and a daughter.
Estimated Net Worth
The estimated net worth of Robert Solow is $109.3 Million