The post-World War II years brought unprecedented economic growth to much of the world, resulting in massive declines in poverty and huge wealth. How long can this go on? In the United States and other highly developed countries, economic growth has slowed significantly after 2000. This book examines the fundamental causes of this slowdown. Although many highly developed countries have experienced declining growth rates, the analysis of economic trends presented here is largely confined to the United States. The focus throughout is on the rate of growth of real GDP per capita and the central question addressed is why this declined from 2.25 percent for 1950–2000 in the United States to just 1 percent during 2000–2016—a decline of 1.25 percentage points. Initial chapters estimate the roles of the three factors of production that drive economic growth according to neoclassical growth theory: physical capital, human capital, and productivity. The per capita growth rates in these factors are calculated for each decade from 1950 to 2016. The main finding is that a decline in the growth rate of human capital is the dominant cause of the slowdown. The expansion of human capital peaked in the 1970s and 1980s and turned negative after 2000. The second most important factor is a reduction in the growth of productivity, caused by a shift over time in spending from goods to services and slower productivity growth in services industries than in manufacturing. Subsequent chapters examine trends in the four factors driving the stock of human capital per capita: workers per capita (i.e., proportion of the population employed), hours worked per week, average worker experience, and average worker education. A large reduction in the growth rate of workers per capita is found to be the dominant explanation for the slowdown in human capital, with the stalling of education improvements playing a smaller but still significant role. The trend in workers per capita is, in turn, attributable to age structure changes brought about by the baby boom and by the leveling-off in women's labor force participation. These findings are important because they imply a new normal of slower growth in the economically advanced countries. The high growth rates of the second half of the 20th century were mostly due to one-time positive developments such as the baby boom moving into the labor force, the mass expansion of higher education and the rise in female labor force participation. The shift from manufacturing to services will likely continue. The text is clearly written, but not an easy read because a large number of factors are examined and the analysis requires the comparison of changes in growth rates (i.e., second derivatives of time series) of the factors of production. My only quibble is with the book's title. Calling a stalling economy a sign of success is at best awkward.
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