productivity for the U.S. labor force over the next two decades is very small. The only exception is the linear productivity equation in Table 6-2, but this estimate should be discounted both because it is inconsistent with the earnings approach and because the quadratic approach has superior statistical qualities.
Therefore, the bottom line is that the committee’s estimates indicate that there is likely to be a negligible effect of the age composition of the labor force on aggregate productivity over the next two decades. The summary judgment is that the age composition effect is between −0.1 and +0.1 percentage point per year.
However, these estimates are subject to some remaining uncertainty. For the earnings estimates, the uncertainties arise because of the concern that earnings do not reflect marginal productivities. If that relationship were clearly established, then the estimates in Table 6-1 indicate that the impact of the changing age distribution is close to zero. From a conceptual point of view, the productivity approach is superior because it would capture the substitution and complementarities among different groups as well as any externalities (at least in the sample period). However, at present, the empirical results are quite fragile and subject to specification concerns, so the results shown in Table 6-2 must be taken as very tentative.
The committee has considered the implications of its review of the relationship between the aging of the workforce and productivity and innovation. There are multiple pathways from a changing age distribution to the growth of productivity and income and their eventual magnitude. The most important in the long run is the rate of total factor productivity. The United States has been a major contributor to technological change, so it is important to ensure that policies are well-designed for innovation in an aging society.
One of the major policy levers on productivity and innovation is immigration. This is particularly important for scientists and innovators, where the United States has proven to be fertile soil for nurturing inventive talent, as was seen in the preceding discussion of the greatest scientists. Immigration has been a major source of scientific and innovative gains in this country over the last century. Immigration, and particularly the skill characteristics of immigration, is perhaps the most important way to affect innovativeness. Immigration policies must therefore be very sensitive to the potential for retarding the flow of the best talent to the United States.
Another factor that can play a particularly important role is the pattern of support for young scientists and engineers. This is an area where small changes in public policy and funding might have a large effect on creative