September 20, 1999
More than one-fourth of the growth in labor productivity in the 1990s has been due to rises in the skill levels of workers. This represents a dramatic change from the 1970s, when skill change contributed almost nothing to labor productivity growth.
Labor productivity in the private business sector grew by 1.30 percent per year on average between 1990 and 1997, and increasing skill levels accounted for 0.41 percentage point of the growth. Between 1973 and 1979, the growth rate of labor productivity was about the same as in the 1990s—1.27 percent per year—but increases in skills only explained 0.03 percentage point of this growth.
For this analysis, skills are measured by the education and work experience of individuals. Labor productivity is measured by output per hour worked.