Should We Be Worried About Productivity Trends?
Many economists are concerned about the apparent structural decline in productivity growth that is underway in many parts of the world. But the single-minded focus on productivity growth fails to account for societies' shifting priorities, which reveal preferences unrelated to maximizing income growth.
MILAN – Economists concern themselves not only with addressing difficult questions thoughtfully, but also with formulating the questions themselves. Sometimes, rethinking those questions can hold the key to finding the answers we need.
Consider the productivity debate. Economists trying to explain the apparent structural slowdown in productivity growth have been asking the following question: Where is the missing increase? Their response covers concerns about measurement, structural shifts in the labor market, a potential paucity of investment opportunities, productivity-diluting technological innovations, and technology-driven skills mismatches.
But it may also be useful to consider a more fundamental question: How much productivity growth do we really want, and at what cost?
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