Productivity and long term growth
Going for Growth 2014: United States
The United States is one of the top performers among OECD countries in terms of both productivity and labour utilisation. It has shown signs recently of a broader-based recovery taking hold with growth gaining momentum. However, protracted labour market weaknesses, which have resulted in a substantial decline in labour force participation, and the recent sluggishness in productivity have highlighted a number of policy challenges to bring trend growth rates closer to pre-crisis levels.
Previous Going for Growth recommendations include:
- Enhance active labour market policies so as to reduce long-term unemployment and raise labour force participation.
- Foster further gains in productivity and income by increasing access to high-quality primary and secondary education.
- Improve the efficiency of the tax system to avoid distorting investment decisions and counter tax avoidance.
- Raise the efficiency of the healthcare sector to address the comparatively high spending and low coverage of health care.
- Reduce producer supports to agriculture that distorts trade and production, by reducing production-related subsidies and remaining agricultural product import barriers.
Actions taken: Notable reforms in these areas over the past two years include:
- Implementation of the Affordable Care Act, which extends the health insurance coverage. The launch has been slowed down by technical problems, but is now under way. Nevertheless, further reforms will be needed to fully address the high costs.
- Community colleges are receiving funding to develop programs with employers for the unemployed. Also, implementation of common standards and competencies in secondary schools is on-going, supported by the “Race to the top” initiative.
The report also discusses the possible impact of structural reforms on other policy objectives (fiscal consolidation, rebalancing the current account and reducing income inequality). In the case of the United States, reforms in the area of education as well as improved access to health care should contribute to higher equality of opportunity, helping to reduce income inequalities.