Fletcher School, Tufts University
Productivity growth is notoriously hard to measure and to predict. But there are a few factors that could be contributing to the slowdown in the U.S. Historically, a large part of productivity growth has come from new, fast growing firms hiring workers away from older, less productive firms. With declining dynamism and fewer start-ups in the economy, this mechanism is much less pronounced today. A slowing rate of capital accumulation – as well as the fact that the education differential between generations is not growing as quickly – could also be contributing factors.
The recent era of increasing income inequality and wage stagnation for those in the bottom two thirds of the income distribution mean that both a robust safety net and a progressive tax system are more important than ever. Unfortunately, recent policy changes have moved in the opposite direction.
Universal basic income (UBI) addresses a future without work. Our current problem isn’t the lack of work. Rather, it is that much of the work does not pay well. To address this, expanding current social safety net programs like the earned income tax credit (EITC) might prove more helpful than instituting a UBI, which would require significantly higher tax sacrifices or spending cuts.
Both existing research and economic theory suggest that of the three legs of the individual market, the most important is likely the premium tax credit, and the mandate likely the least important. The individual market will most likely not completely collapse in the absence of an individual mandate, because the premium tax credit will probably shoulder most of the burden the mandate bore. However mandate repeal will have consequences, especially for relatively high income Americans, who are ineligible for premium subsidies. For subsidy-ineligible Americans — those who purchase insurance from the individual market and whose incomes are above 400 percent of the poverty line — rising premiums represent a very real increase in the cost of coverage. And rising premium tax credits also represent a cost to society, since they must be paid for by taxpayers.
While most economists agree that immigration does not affect the overall rate of employment, or the average wage among native workers, there are winners and losers. Those who stand to lose are most often high school dropouts, who find themselves competing for similar jobs with unskilled immigrants. At the same time, immigration brings with it changes in the kind of jobs demanded by the economy, opening up new opportunities that natives can move in to more easily. But, there are transitional costs which the native-born population can face in changing jobs--and these costs are often ignored.