Taxes and Economic Growth

Here is a conclusion of a 2012 CRS report titled “Taxes and the Economy: An Economic Analysis of the Top Tax Rates Since 1945 (Updated)”

It is reasonable to assume that a tax rate change limited to a small group of taxpayers at the top of the income distribution would have a negligible effect on economic growth.

The report isn’t conclusive as the report looks at their association and not causation, but the report reinforces (to me anyways) that the Republicans need a broader solution to 1) achieving economic growth and 2) producing growth that is more inclusive. There are all sorts of ways to evaluate economic policy including GDP growth and its allocation, labor participation, unemployment, etc..  Economic growth seems to be the only metric Republicans talk or care about and even if we can growth the economy, we still need to make sure it “works for everyone.”

You can read the rest here.

 

 

“Almost 88 percent of job losses in manufacturing in recent years can be attributable to productivity growth, and the long-term changes to manufacturing employment are mostly linked to the productivity of American factories.”

That is the conclusion of 2015 research conducted by Michael J. Hicks and Srikant Devaraj.

Here is the summary

Manufacturing has continued to grow, and the sector itself remains a large, important, and growing sector of the U.S. economy. Employment in manufacturing has stagnated for some time, primarily due to growth in productivity of manufacturing production processes.

 

Three factors have contributed to changes in manufacturing employment in recent years: Productivity, trade, and domestic demand. Overwhelmingly, the largest impact is productivity. Almost 88 percent of job losses in manufacturing in recent years can be attributable to productivity growth, and the long-term changes to manufacturing employment are mostly linked to the productivity of American factories. Growing demand for manufacturing goods in the U.S. has offset some of those job losses, but the effect is modest, accounting for a 1.2 percent increase in jobs beyond what we would expect if consumer demand for domestically manufactured goods was flat.

 

Exports lead to higher levels of domestic production and employment, while imports reduce domestic production and employment. The difference between these, or net exports, has been negative since 1980, and has contributed to roughly 13.4 percent of job losses in the U.S. in the last decade. Our estimate is almost exactly that reported by the more respected research centers in the nation.

 

Manufacturing production remains robust. Productivity growth is the largest contributor to job displacement over the past several decades. This leads to a domestic policy consideration.

Short reading with plenty of data. You can read the entire thing here.