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The Outlook for U.S. Labor-Quality Growth

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  • Bosler, Canyon

    (Federal Reserve Bank of San Francisco)

  • Daly, Mary C.

    () (Federal Reserve Bank of San Francisco)

  • Fernald, John G.

    () (Federal Reserve Bank of San Francisco)

  • Hobijn, Bart

    () (Arizona State University)

Abstract

Over the past 15 years, labor-quality growth has been very strong—defying nearly all earlier projections—and has added around 0.5 percentage points to an otherwise modest U.S. productivity picture. Going forward, labor quality is likely to add considerably less and may even be a drag on productivity growth in the medium term. Using a variety of methods, we project that potential labor-quality growth in the longer run (7 to 10 years out) is likely to fall in the range of 0.1 to 0.25 percent per year. In the medium term, labor-quality growth could be lower or even negative, should employment rates of low-skilled workers make a cyclical rebound towards pre-recession levels. The main uncertainties in the longer run are whether the secular decline in employment of low-skilled workers continues and whether the Great Recession pickup in educational attainment represents the start of a new boom or is simply a transitory reaction to a poor economy.

Suggested Citation

  • Bosler, Canyon & Daly, Mary C. & Fernald, John G. & Hobijn, Bart, 2016. "The Outlook for U.S. Labor-Quality Growth," Working Paper Series 2016-14, Federal Reserve Bank of San Francisco.
  • Handle: RePEc:fip:fedfwp:2016-14
    DOI: 10.24148/wp2016-14
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    Cited by:

    1. John G. Fernald & J. Christina Wang, 2016. "Why Has the Cyclicality of Productivity Changed? What Does It Mean?," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 465-496, October.
    2. Clemens, Jeffrey, 2017. "The Minimum Wage and the Great Recession: A Response to Zipperer and Recapitulation of the Evidence," MPRA Paper 80153, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada

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