The UK productivity and jobs puzzle: does the answer lie in wage flexibility?

Pessoa, João Paulo and Van Reenen, John ORCID: 0000-0001-9153-2907 (2014) The UK productivity and jobs puzzle: does the answer lie in wage flexibility? The Economic Journal, 124 (576). pp. 433-452. ISSN 0013-0133

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Abstract

UK GDP per worker fell by almost 4% in the five years following Lehman's collapse in 2008, something unprecedented in post-war history. A possible reason for poor productivity is low growth in the effective capital-labour ratio. This is likely to have occurred because there has been a fall in real wages and increases in the cost of capital due to the financial crisis. We simulate various changes in the capital-labour ratio and after accounting for these changes, the evolution of total factor productivity appears much more similar to earlier severe recessions and likely to be related to underutilised resources.

Item Type:	Article
Official URL:	http://onlinelibrary.wiley.com/journal/10.1111/(IS...
Additional Information:	© 2014 Blackwell Publishing Ltd
Divisions:	Economics Centre for Economic Performance
Subjects:	H Social Sciences > HC Economic History and Conditions
Date Deposited:	12 Jun 2014 16:29
Last Modified:	11 Sep 2025 08:48
URI:	http://eprints.lse.ac.uk/id/eprint/57051

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