The Cato Institute has gathered a collection of short policy papers from economists and analysts that answer the following question: “If you could wave a magic wand and make one or two policy or institutional changes to brighten the U.S. economy’s long-term growth prospects, what would you change and why?”
I took up the challenge. I first argue that “jobs are an extremely important component — indeed, the key component over the short run — to economic growth.” I then establish that workforce participation is dropping.
The first thing I would do [to brighten long-term growth prospects in light of falling workforce participation] — and I list this first because it is seldom discussed despite its clear importance — is increase the capacity of the federal government to collect social and economic data.
In order to (1) better understand why fewer men are working, and (2) understand how public policy can best attempt to reverse that trend, we simply need to know more than we know today about workers, potential workers, and the tasks firms want them to do.
The truth is that we don’t know enough about any of these. And much of what we do “know” is often inferred rather than measured.
You can read my short paper here.
— Michael R. Strain is deputy director of economic policy studies and resident scholar at the American Enterprise Institute. You can follow him on Twitter at twitter.com/MichaelRStrain.