In this pre-released Green Budget chapter, IFS researchers address 'Productivity Puzzles'. There are many factors affecting productivity. We find little evidence that the overall fall has been caused by labour hoarding, the demise of financial services or changes in workforce composition. Instead, we conclude that the key contributing factors are likely to be low real wages, low business investment and a misallocation of capital.
This paper is a pre-released chapter from the February 2013 IFS Green Budget, funded by the Nuffield Foundation and to be launched on Wednesday 6th February 2013.