Productivity in Education and the Growing Gap with Service Industries

The nation’s economic growth following the recession of 2001 has often been characterized as a jobless recovery. While many point to the off-shoring of jobs to explain low job growth in the United States, a more important factor has been the acceleration of productivity improvements within the domestic economy. In the short run, an increase in productivity growth can cause social tensions as workers fear that increased productivity implies that firms will produce the same with fewer workers. In the long run, however, productivity growth has been the primary source of the increase in living standards: the nation produces more without an increase in unemployment. Historically, episodes of strong productivity growth have been associated with robust employment growth and low rates of unemployment. In the current cycle, the new phenomenon has been the contribution of the service-producing industries to the overall acceleration of productivity growth. The recognition of these