Cracking the productivity code: an international comparison of UK productivity

Van Reenen, John ORCID: 0000-0001-9153-2907 and Yang, Xuyi (2024) Cracking the productivity code: an international comparison of UK productivity. International Productivity Monitor, 46. 60 - 82. ISSN 1492-9759

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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.

Item Type:	Article
Official URL:	https://www.csls.ca/ipm.asp
Additional Information:	© 2024 The Authors
Divisions:	Economics Centre for Economic Performance
Subjects:	H Social Sciences > HC Economic History and Conditions
JEL classification:	E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E20 - General O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output (Income) Convergence J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J24 - Human Capital; Skills; Occupational Choice; Labor Productivity O - Economic Development, Technological Change, and Growth > O5 - Economywide Country Studies > O52 - Europe
Date Deposited:	16 Aug 2024 13:27
Last Modified:	20 Dec 2024 00:56
URI:	http://eprints.lse.ac.uk/id/eprint/124590

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