Working Paper: NBER ID: w22453
Authors: Dale W. Jorgenson; Mun S. Ho; Jon D. Samuels
Abstract: Labor quality growth captures the upgrading of the labor force through higher educational attainment and greater experience. We find that average levels of educational attainment of new entrants remain high, but will no longer continue to rise. Growing educational attainment will gradually disappear as a source of U.S. economic growth. We find that the investment boom of 1995-2000 drew many younger and less-educated workers into employment. Employment rates for these workers declined during the recovery of 2000-2007 and dropped further during the Great Recession of 2007-2009. Based on estimates of labor quality growth, growth in total factor productivity, and growth in capital quality, we project labor productivity to grow at 1.3% per year. This implies a GDP growth rate of 1.8%.
Keywords: Labor Quality Growth; Economic Growth; Educational Attainment; Employment Rates; Productivity
JEL Codes: E01; E24; O4; O47
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Educational attainment (I21) | Economic growth (O00) |
| Investment boom from 1995-2000 (F21) | Employment rates of younger and less-educated workers (F66) |
| Employment rates of younger and less-educated workers (F66) | Employment rates during recovery from 2000-2007 (J68) |
| Employment rates during recovery from 2000-2007 (J68) | Employment rates during the Great Recession (2007-2009) (J63) |
| Employment recovery (J68) | Economic growth (O00) |
| Educational attainment (I21) | Employment rates for each age-gender category (J21) |
| Employment rates for highly educated groups (J79) | Employment rates for less-educated groups during the Great Recession (F66) |