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Way to Grow: Jobs vs. Per-Capita Output

  • Economics
  • Education


4  THE CONNECTICUT ECONOMY  FALL 2006 By STEVEN P. LANzA It’s an election year, and no issue looms larger in the race for the state- house than economic growth and development in the Nutmeg State. But the matter is hardly cut and dried. First, the problem itself is obscure. By some measures the state’s economy seems stalled: payrolls haven’t yet recov- ered from the 2001 recession, and they remain below their 1989 peak. But look again and what appears is a state that ranks 3rd in output per worker and GSP per capita, and outshines all others in per capita and household income. Second, the potential solutions are many, and potentially contradic- tory. Which strategies for development make the most sense? Targeted incen- tives? Lower taxes? Better services? Less regulation? These questions suggest that mak- ing sense of economic development requires both a better handle on avail- able measures of economic wellbeing, and some empirical evidence relating economic progress to the factors that may help bring it about. Two conclusions emerge from such an analysis: Output per person tells us more about the state of devel- opment than do jobs. And few factors rival education as a determinant of economic wellbeing. JOBS OR GSP? Jobs are an important—and cer- tainly the most frequently cited—indi- cator of economic health. Why so? For one thing, the light is better there: employment statistics are released monthly and just a week or two after the end of the month being reported. Other indicators are available only quarterly or annually and with longer lags. Also, payroll numbers are sorted by industry and geographic area and so provide a remarkably detailed picture of economic activity. Plus, jobs are of enormous practi- cal importance. Every job represents a person working, earning income, and providing for his or her family. Loss of a

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