The Future of Productivity reminds us that fostering innovation and promoting knowledge diffusion requires an environment where scarce resources, particularly human talent, flow to their best use. Reviving diffusion and improving resource allocation has the potential to not only sustain and accelerate productivity growth but also to make this growth more inclusive, by allowing more firms and workers to reap the benefits of the knowledge economy. …
Reforms centred on improving the efficiency of resource allocation, which is far from optimal in many OECD countries, may also revive growth by making it easier for productive firms to thrive. More specifically, there is much scope to boost productivity and reduce inequality simply by more effectively allocating human talent to jobs. Since the knowledge economy increasingly requires skills that our education systems struggle to provide, the growth and equity benefits of policies that more effectively allocate human talent will rise. Achieving aggregate productivity gains via more efficient resource allocation requires well-designed framework policies accompanied by a range of flanking policies – including adult learning policies, well-designed social safety nets and portable health and pension benefit – to ensure that these gains are distributed more evenly than otherwise. But policy-makers also need to cast a wider net and recognise the potentially adverse effects of housing policies that restrict worker mobility on productivity via the channel of skill mismatch.
The Future of Productivity – Online version