Slowdown In Economic Growth

U.S. economics professor Robert Gordon attributes the recent slowdown in economic growth in the U.S. to four main headwinds: demography, education, inequality and government debt. This paper will analyze two of these headwinds, demography and education, both of which are connected to innovation positively or negatively.

The first headwind is demography.

In general, the U.S. population is projected to grow more slowly in future decades than in the recent past, which will result in a decline in labor force participation. These demographic changes have a significant impact on economic growth.

Firstly, according to Gordon, the hours per capita are now declining because of the retirement of the baby boom generation. Although the baby boomers

Triest suggest that as labor becomes scarce and costly relative to capital, producers will try to shift the labor productivity schedule outward through capital deepening or innovation. Accordingly, economists would expect to find a negative relationship between the growth of the labor force and the growth in labor productivity. Cutler et al. (1990) also argue that incentives to innovate are strongest when labor is scarce. Conversely, Gordon states that productivity growth has been flat in recent years. He believes that computers and other recent inventions are not as useful as the innovations from the second industrial revolution such as electricity, the internal combustion engine, petroleum-based products, and communication technology which resulted in more than 80 years of rapid productivity growth between 1890 and

The National Assessment of Educational Progress (NAEP), the largest standardized test administered in the United States, reports that fewer than 40 percent of graduating seniors have mastered reading and math, and are poorly equipped for college and reality.

At college level, the main issue is affordability and student debt. Cost inflation in university education has led to a significant increase in student borrowing. When students take on large debts, they face two kinds of risks. First, some students face completion risk because they may drop out of college. Second, some students may not be able to find a job matching their high education level, so they fall short of the average income compared with typical college graduate.

Furthermore, Elsevier states that the majority of the macroeconomic literature on economic returns to education employs measures of the quantity of schooling, averaged across the working-age population. It is poor education quality and education condition that bring about low labor productivity. Therefore, the government must pay more attention to the quality of schools because economic growth depends on the knowledge and skills of the