The strong and steady expansion in labor force participation by women after World War II slowed after 1989, and there is no warrant to assume the earlier growth rate will resume. The labor input projection is likely to be reliable over the next 10-15 years. Productivity is a little more open to question, but not much. From war s end until about 1973, productivity grew almost 3 percent a year. Thereafter, despite the information revolution, productivity growth slowed sharply to little more than 1 percent.
Economists can explain only part of the decline the reasons for much of it remain a mystery.
But whatever the reasons, the productivity trend has remained remarkably steady for more than 20 years. Not knowing what caused the decline, we can't be sure productivity growth won t one day pick up again. But it would be foolhardy to plan national policy on that hope. Such changes are possible, and I will examine several in a moment. But the cold facts of economic life tell us that no politically feasible policy is going to raise the current rate of economic growth by more than several tenths of a percentage point a year.