Childhood & Early Years
Simon Kuznets was born on April 30, 1901 in the city of Pinsk, then under the Russian Empire. Not much is known about Simon’s parents except that his father was a banker and that they had three sons, out of which Simon was born second.
Simon began his primary education in Pinsk. Later at the age of nine or ten, he moved with his family to Rovno in Eastern Ukraine, also a part of Russian Empire. There they lived with his mother’s family, who were well-to-do furriers there.
In Rovno, he was enrolled at the secondary school. Concurrently, he received his training in Judaism and Jewish history from his grandparents. Thus he was raised in mixture secular and Jewish heritage.
Sometime before the start of the First World War, his father and older brother migrated to the United States while he and his younger brother stayed back with their invalid mother. In the USA, his father changed his surname to Smith; however Simon never took it up.
Meanwhile in Ukraine, due to Jewish expulsion, the family was forced to leave Rovno. They now settled in Kharkiv/Kharkov, located in Western Ukraine, then a part of Austro-Hungarian Empire.
Here in October, 1916, Simon entered Kharkiv High school for his secondary education. It was in this school that he was first introduced to economics. During this period, he was much influenced by Joseph Schumpeter's theory of innovation and the business cycle.
In 1818, Simon Kuznets entered Kharkiv Institute of Commerce under the Kharkiv National University of Economics with economic sciences, statistics, history and mathematics. Here he had a rigorous training in statistical and empirical methods and acquired a thorough knowledge in economics, history, demography, statistics and natural sciences.
Unfortunately, his education was interrupted when after the 1920 civil war the Soviet Government took over the town and started reorganizing the University courses. Although it is not known if he had actually left the university at this point it is certain that he did not complete his courses there.
It is also known that sometime in 1920, he joined the Department of Labor of UZHBURO (South Bureau) of the Central Council of Trade Unions. Here, he published his first scientific paper, entitled ‘Monetary wages and salaries of factory workers in Kharkiv in 1920’.
In 1921, the family, along with many other Jews, was deported to Poland. Although their father wanted them to join him at the USA, they were reluctant to do so because of their mother’s delicate health. However, when Simon Kuznets was arrested for no specific reason, the family decided to move.
Sometime after that, the three left for the USA. Unfortunately, their mother never reached her destination, dying on the way in Warsaw. Travelling via the Free City of Dantzig, the two brothers joined their father in the USA in 1922.
In the same year, Simon Kuznets enrolled at the Columbia University, New York and resumed his studies in economics, earning his B. Sc degree in 1923 and M.A. degree in 1924.
In 1925, Simon Kuznets joined Social Science Research Council as a Research Fellow. Here he studied economic patterns in prices for one and half years with Wesley Clair Mitchell.
Later, he defended the work as his doctoral thesis and earned his PhD in 1926. Many of his future research efforts were actually based on this doctoral dissertation entitled ‘Cyclical Fluctuations in Retail and Wholesale Trade’.
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In 1927, Simon Kuznets began his career as a member of research staff at the National Bureau of Economic Research (NBER), a private nonprofit research organization, co-founded by his doctoral advisor Wesley Clair Mitchell. He remained associated with the institution till 1961.
At NBER, he continued to expand on his doctoral dissertation, basing his work on the long series of economic dynamics undertaken in the USA in the middle of 1920s. In 1930, he published the result as ‘Secular Movements in Production and Prices: Their Nature and Their Bearing upon Cyclical Fluctuations’.
In 1931, Kuznets became in charge of National Bureau’s work on national income accounts. In the same year, he was appointed a part-time professor at the University of Pennsylvania. From now until 1961, he would hold his teaching posts simultaneously with his research job at NBER.
Continuing his research on national income at NBER, Kuznets submitted a comprehensive report in 1934. He first provided an assessment of the national income in the US for the period of 1929 to 1932. Later it was extended from 1919 to 1938 and finally to 1869.
On analyzing them meticulously, he identified certain medium-range economic waves, spanning a period of 15 to 25 years. Thereafter, he connected them with demographic processes, especially with the inflow and outflow of the immigrants and their effect in construction business.
Later he denoted that these movements as demographic cycles or swings. Today they are known as ‘Kuznets Cycles/Swings’ and interpreted as infrastructural investment cycles. The work made him justly famous.
In 1936, he was made a full professor at the University of Pennsylvania, a position he held till 1954. Also in 1936, he took the lead in establishing the Conference on Research Income and Wealth, a body comprising of government officials and academics.
In 1942, Kuznets was elected the Associate Director of the Bureau of Planning and Statistics, War Production Board. His main responsibility was to assess the nation’s capability of expanding its military production and he worked in this capacity till 1944.
After the end of the Second World War, he was appointed advisor to a number of economically weak countries such as China, Japan, India, Korea, Taiwan, and Israel. By then, he had moved into a new research area involving the relation between changes in income and overall growth.
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His main focus was on demographic growth, growth of knowledge, in-country adaptation to growth factors, and external economic relations between the countries. The International Association for Research in Income and Wealth he helped to establish in 1947 was the result of this work.
Sometime now, he also worked with the Growth Center of Yale University to establish Social Science Research Council Committee on Economic Growth, holding the post of its chairman from 1949 to 1968. In this capacity, he worked mainly on the comparative quantitative analysis of economic growth of different nations.
Next in 1953, he was elected a member of the Board of Trustees and Honorary Chairman, Maurice Falk Institute for Economic Research in Israel, a position he held until 1963. Simultaneously, he continued with teaching position.
In 1954, he left to the University of Pennsylvania to join Johns Hopkins University as the Professor of Political Economy, holding the position till 1960. Thereafter he joined Harvard University, remaining with it till 1971. Concurrently, from 1961 to 1970, he was the Chairman, Social Science Research Council Committee on the Economy of China.
Kuznets continued to work well into 1970s. During this period, he mainly worked on the interaction between science and technology as well as on the institutional shifts. Besides, external factors such as the moral and political climate in society etc were also subject of his study.
Simon Kuznets is best known for his studies of national income and its components. Prior to his work, GDP was determined mostly by rough guesses with neither the government agencies nor the private researchers collecting the data so meticulously.
Starting his work in 1931, he computed national income back to 1869 and then broke it down first by industries, then by final products and finally by use. He also worked on the distribution of income between rich and poor. The work, which spanned for almost a decade, later became a standard in this field.
Awards & Achievements
In 1971, Simon Kuznets received the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1971 "for his empirically founded interpretation of economic growth which has led to new and deepened insight into the economic and social structure and process of development.
In 1977, he was awarded the Medal of Francis Walker by the American Economic Association. He was also a member of the said association and was elected its President in 1954.
In addition, he was a member of American Statistical Association and was elected its President in 1949. Besides, he was also a member of Royal Academy of Sweden, American Philosophical Society, International Statistical Institute and Economic History Association.
He was also elected a fellow of Econometric Society, honorary fellow of Royal Statistical Society of England and corresponding fellow of British Academy.
Personal Life & Legacy
In 1929, Kuznets married Edith Handler, a Russian-Canadian Jew. They had two children; Paul and Judith and from them, four grandchildren. Later Paul became a Professor of Economics at the University of Indiana while Judith married a Professor of Mathematics at the University of Rochester.
Although he brought up his children strictly in secular American manner, he retained a personal interest in the affairs of Soviet Russia and was a great opponent of the communist regime there. He was also an avid reader of Russian literature and like most other Jews was highly affected by the Holocaust.
Towards the end of his career, he set up his home in Cambridge, Massachusetts and died there on July 8, 1985. He was then 84 years old.
In 1913, The Kharkiv National University of Economics, where he studied from 1918 to 1921, was renamed in his honor as Semen Kuznets Kharkiv National University of Economics.