Why should we Care about Productivity?

Vicky Pryce

National Institute Economic Review, 2015, vol. 231, R30-R35

Abstract: The ‘productivity puzzle’ – the substantial drop in productivity in the UK since the onset of the financial crisis in 2008 – has exercised economists and policymakers alike. The loss in productivity levels, mainly output per hour, should have been restored by now and the trend growth should have been recovered, or even exceeded. Instead after a very sharp fall, much faster than many of our competitors, it has only recently started to rise again, but at a stubbornly slow rate and at the time of writing stood some 2 per cent below its pre-recession levels. So although we are likely to get back to where we were pretty soon, it is possible that the gap, with where we should have been on pre-recession trends, continues. The Bank of England calculates this gap could stay as high as 16 per cent or even widen if the rate of productivity increase does not return to normal. This is bad for the economy and especially bad for innovation, investment, growth and competitiveness. This paper examines possible explanations and offers some possible answers. It sides, in the end, more with those that argue that demand deficiency looks like being at least a part of the explanation, but acknowledges that changes in the structure and destination of employment, since the recession started, have also played a role.

Date: 2015
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.cambridge.org/core/product/identifier/ ... type/journal_article link to article abstract page (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cup:nierev:v:231:y:2015:i::p:r30-r35_14

Access Statistics for this article

More articles in National Institute Economic Review from National Institute of Economic and Social Research Cambridge University Press, UPH, Shaftesbury Road, Cambridge CB2 8BS UK. Contact information at EDIRC.
Bibliographic data for series maintained by Kirk Stebbing ().