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A ‘High-Pressure Economy’ Can Boost Productivity

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  • Josh Bivens

Abstract

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.

Suggested Citation

  • Josh Bivens, 2017. "A ‘High-Pressure Economy’ Can Boost Productivity," Challenge, Taylor & Francis Journals, vol. 60(5), pages 405-423, September.
    • Handle: RePEc:mes:challe:v:60:y:2017:i:5:p:405-423
    DOI: 10.1080/05775132.2017.1366390
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    References listed on IDEAS

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    1. repec:cbo:report:523702 is not listed on IDEAS
    2. Congressional Budget Office, 2017. "An Update to the Budget and Economic Outlook: 2017 to 2027," Reports 52801, Congressional Budget Office.
    3. repec:cbo:report:523701 is not listed on IDEAS
    4. Congressional Budget Office, 2017. "The Budget and Economic Outlook: 2017 to 2027," Reports 52370, Congressional Budget Office.
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