A 'High-Pressure Economy' Can Boost Productivity

摘要

The last four years have seen an extraordinarily sharp deceleration in productivity growth (the average amount of income generated in an hour of work in the economy)- In fact, it has been below 1 percent for three years. But taking the slow productivity growth in recent years as fixed and unchangeable would be a huge policy mistake. It locks in inadequate fiscal and monetary policies. On the flip side, argues the author, there is evidence that pushing up wages by further reducing unemployment would increase productivity as businesses gain more incentive to invest in the capital equipment and processes that make those workers more productive.