Investing in People as an Economic Growth Strategy – a link to the achievement gap

| July 30, 2014
July 13

It might not be obvious why the president of a Federal Reserve Bank would be interested in workforce development — what does it have to do with interest rates and inflation? But workforce development is intimately related to part of the Fed’s legislative mandate, which is promoting maximum employment. That has proven to be a difficult task in the wake of 2007-09 recession, as I’m sure you are all too aware.

The long-term unemployment rate remains at a historical high, and the labor force participation rate is at its lowest rate in decades. So in addition to the large number of unemployed, there are also many people who have dropped out of the labor force altogether. That has led me and other policymakers to ponder a difficult question: Given the limitations of monetary policy, what can be done to improve labor market outcomes in the long run?

At the Richmond Fed, our research suggests that much of what we’re currently seeing in the labor market reflects structural trends rather than a primarily cyclical change in labor market behavior. That has prompted us to think about long-term strategies to prepare workers for the labor market. We’ve been thinking about workforce development at the level of the individual: What can be done to improve people’s skills and adaptability, what economists call “human” capital?

…….Research suggests that non-cognitive skills — such as following instructions, patience and work ethic — lay the foundation for mastering more complex cognitive skills and may be just as important a determinant of future labor market success. These basic emotional and social skills are learned very early in life, and it can be difficult for children who fall behind to catch up: Gaps in skills that are important for adult outcomes are observable by age 5 and tend to persist into adulthood.


Tags: , , , , , , , , , , ,

Category: Education, Health, Programs, Resources

Comments are closed.