Cracking the productivity code: an international comparison of UK productivity

John van Reenen and Xuyi Yang

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We examine the growth and level of UK productivity compared to France, Germany and the United States. There has been a marked slowdown in labour productivity growth: comparing the dozen years before and after the Global Financial Crisis. The average annual growth of the UK’s real value added per hour in the market economy has fallen from 2.5 per cent to 0.5 per cent. Just over half of this two percentage point slowdown is due to slower TFP growth, which is broadly similar in magnitude across countries. Britain experienced a much larger slowdown in the growth of capital intensity than other countries and it is this (alongside a smaller contribution from slow skills growth) which accounts for the particularly severe ‘productivity puzzle’. The level of UK labour productivity is also low compared to peers, especially the United States. In 2019, lower tangible and intangible capital intensity accounted for about half of this gap. These findings suggest that UK policy should focus on the problem of chronic under-investment.

JEL-codes: E20 J24 O47 O52 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2024-03-01
New Economics Papers: this item is included in nep-eff
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Published in International Productivity Monitor, 1, March, 2024, 46, pp. 60 - 82. ISSN: 1492-9759

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Related works:
Journal Article: Cracking the Productivity Code: An International Comparison of UK Productivity (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:124590

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