What Explains Slow Productivity Growth in the United States? (VIDEO)
Harvard University and George Washington University and The Hamilton Project, Brookings Institution
Excerpt from webinar with Karen Dynan (Harvard University), Jay Shambaugh (George Washington University, and The Hamilton Project at The Brookings Institution), and Eduardo Porter (New York Times), October 23, 2018. A collaboration between EconoFact and The Hamilton Project, Brookings.
The Issue:Productivity growth, a measure of how efficiently goods and services are produced and a key determinant of economic growth, has been slow in the U.S. since the early 2000s. Karen Dynan at Harvard University, Jay Shambaugh at George Washington University and The Hamilton Project at The Brookings Institution, and Eduardo Porter of The New York Times look at some of the reasons for the slowdown.
Despite rapid advances in technology, productivity growth has declined across advanced economies.
What this Means:
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.