United States

Going for Growth 2016: United States

 

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‌The recovery of the US economy has kept momentum, although investment remains subdued in contrast to a comparatively good employment performance. Productivity growth, in particular gains in multifactor productivity have been modest in recent years, despite the comparatively high investment in knowledge-based capital and a business environment generally favourable to entrepreneurship. A number of structural weaknesses need to be addressed in order to ensure that stronger productivity growth can be sustained in the long run, in particular in the areas of educational outcomes and taxation. Increasing the supply and quality of early childhood education and care (ECEC) is of particular importance, as it influences the participation and performance of students at higher education levels.

1. Early childhood education target children aged below the age of entry into ISCED level 1. There are two categories of ISCED level 0 programmes: early childhood educational development (ISCED 01) and pre-primary education (ISCED 02). Data for Canada are missing.

2. Public and private expenditure. The last available year is 2013 for Indonesia. Public expenditure only for Switzerland and public institutions only for Italy, Poland, Portugal and Switzerland. Data for Canada are missing.

Source: OECD (2015), Education at a Glance 2015: OECD Indicators.

Previous Going for Growth recommendations include:

  • Strengthening active labour market policies by continuing to broaden and enhance activation measures, such as training, by reinforcing the support for adult training through better links to local employers, and by expanding successful pilot programmes conducted under the Disability Employment Initiative.
  • Improving the efficiency of the health care sector by continuing to conduct pilot programmes of Medicare provider payment systems, by assessing the comparative effectiveness of prescription drugs and research by the Patient Centred Outcome Research Institute, and by ensuring that cost-saving measures identified by research and in the pilot programmes are rolled out and their impact monitored.
  • Improving the efficiency of the tax system by cutting the statutory marginal corporate income tax rate and broadening its base so as to reduce the incentive to shift business activity to non-corporate forms, by eliminating regressive exemptions such as mortgage interest deductions for owner-occupied housing, by simplifying eligibility procedures for numerous (and often changing) tax provisions and by increasing reliance on consumption and environmental taxation.
  • Improving equality of opportunity and outcomes in education by expanding effective targeted pre-school initiatives such as Head Start, Early Head Start and evidence-based home visiting programmes, by ensuring states meet quality standards to receive federal support, including requiring pre-school teachers to have the required skills and competencies and by supporting the adoption and introduction of common core standards in primary and secondary education.
  • Reducing producer support to agriculture by continuing to lower production-related subsidies (including the subsidised crop insurance programmes) and the remaining agricultural-produce import barriers.

 

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Recent policy actions in these areas include:

  • In mid-2015, the Workforce Innovation and Opportunity Act came into force. This act consolidates job training programmes and seeks to streamline services to assist job seekers. The implementation aims to yield better results by concentrating resources on programmes that are proved to be effective and become more responsive to business needs. A sixth round of funding for the Disability Employment Initiative was launched in 2015.
  • During 2015, The Centres for Medicare and Medicaid Services (CMS) expanded the pilot project “Bundled Payments for Care Improvement Initiative” to over 2000 additional hospitals and medical establishments. The Census Bureau reported that during 2014 the number of uninsured persons dropped by 3 percentage points to 33 million.
  • The Every Student Succeeds Act of December 2015, which replaces No Child Left Behind, aims to set high standards for students, holding schools accountable for their performance and requiring states to intervene when students are underperforming. States will exercise more authority in setting the standards. The act expands access to pre-schools.

The report also discusses the possible impact of structural reforms on other policy objectives (fiscal consolidation, narrowing current account imbalances and reducing income inequality). In the case of the United States, improving access to high-quality education and helping the return to work of the unemployed would help reduce inequality.

Economic Policy Reforms 2016 

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