The relationship between education and the United States (U.S.) economy was explored to identify research needed to inform employment policy in the future. Special attention was paid to the following topics: the state of education in the U.S.; key problems in grades K-12 that must be addressed; student achievement; inequity; costs of special education; and proposed "silver bullet" answers to existing problems. On the basis of the evidence reviewed, it was concluded that mediocre educational results do not threaten economic performance and that major initiatives toward reforming education have had limited success. It was further concluded that research and policy analyses in the economics of education can play an important role in directing educational policymakers toward improved student achievement through better curriculum, instruction, leadership development, and professional development. The following were among the areas of inquiry suggested: (1) using econometric techniques to identify the impacts of programs and initiatives; (2) identifying those interventions that work best with disadvantaged students; (3) assessing the cost-effectiveness of educational initiatives; (4) determining the best ways of using incentives to improve the system; and (5) determining whether financing affects student achievement and identifying ways of improving the equity and efficiency of financing public education. (Contains 15 references.) (MN)