Education Intensity and the Sources of, and Prospects for, U.S. Economic Growth

We identify a new mechanism whereby education impacts economic growth: industry educational intensity. We define educational intensity as the share of an industry's workforce with a college degree and above and use this new classification to build estimates of the sources of U.S. economic growth from the bottom up across industries. We find that that since 1995, the contribution of education intensive industries to aggregate value added growth exceeds that of non-education intensive industries and that this difference was driven by larger contributions of capital, labour, and TFP growth in these industries. The shift toward educationally intensive industries has not been enough to revive aggregate labour productivity and GDP growth over the medium term; we find that growth over the next ten years will be restrained by slower growth in capital and labour quality.