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What can wages and employment tell us about the UK's productivity puzzle?

IFS Working Paper W13/11

This paper uses individual data on employment and wages to shed light on the UK’s productivity puzzle. It finds that workforce composition cannot explain the reduction in wages and hence productivity that we observe; instead, real wages have fallen significantly within jobs. Why? One possibility we investigate is higher labour supply in this recession than in the past. Another is lower trade union membership. Alternatively, it might be driven by a fall in productivity as a result of a lower capital-labour ratio. We cannot tell whether productivity is driving wages or vice versa, but understanding why wages have fallen within jobs is at the heart of the UK's productivity puzzle.

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Journal article | Economic Journal
what_can_wages_and_employment_tell_us_about_the_uks_productivity_puzzle
Journal article | Fiscal Studies, Vol. 34, No. 2, June 2013
From an economic point of view, the period since the recession that began in 2008 has been quite unlike any other period since at least the Second World War, including the periods after the recessions of the early 1980s and early 1990s. Indeed, the slowdown has lasted for longer, and its effects on ...
Press release
Analysis publsihed today provides new insight into the UK's so-called "productivity puzzle".