The Outlook for U.S. Labor-Quality Growth

69 Pages Posted: 31 Aug 2016 Last revised: 9 Sep 2016

See all articles by Canyon Bosler

Canyon Bosler

Federal Reserve Banks - Federal Reserve Bank of San Francisco

Mary C. Daly

Federal Reserve Bank of San Francisco

John G. Fernald

Federal Reserve Bank of San Francisco

Bart Hobijn

ASU

Date Written: August 2016

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 and Daly, Mary Colleen and Fernald, John G. and Hobijn, Bart, The Outlook for U.S. Labor-Quality Growth (August 2016). NBER Working Paper No. w22555. Available at SSRN: https://ssrn.com/abstract=2832559

Canyon Bosler (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of San Francisco ( email )

101 Market Street
San Francisco, CA 94105
United States

Mary Colleen Daly

Federal Reserve Bank of San Francisco ( email )

101 Market Street
San Francisco, CA 94105
United States

John G. Fernald

Federal Reserve Bank of San Francisco ( email )

101 Market Street
San Francisco, CA 94105
United States
415-974-2135 (Phone)

HOME PAGE: http://www.frbsf.org/economics/economists/jfernald.html

Bart Hobijn

ASU ( email )

501 E. Orange Street
Tempe, AZ 85287-9801
United States
(480)-965-0215 (Phone)

HOME PAGE: http://www.barthobijn.net

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