Labour market productivity is thought by economists to be the key determinant of average living standards in the long run. While productivity growth, as measured by real output per worker, remained stable through the early 1980s and 1990s recessions, it collapsed during the late 2000s Great Recession, with employment holding up better than anticipated.
Understanding this 'productivity puzzle', and what drives labour market productivity more generally, is an important topic of research at the IFS. Key questions include the relative importance of changes in hours worked and hourly wages, and how characteristics such as firm size effects company-level labour productivity.
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