Unbalanced Growth and the U.S. Productivity Slowdown
The single most important factor in determining a nation’s standard of living in the long run is the productivity of its resources (primarily labor and capital). If maintained over time, even relatively small productivity growth rates can have large effects on living standards. For example, if productivity grew at a moderate 2.0 percent each year, the overall standard of living would double in only 35 years.
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