Dr Ana Rincon-Aznar will give a presentation during the IBS research seminar series on 23rd May
|Date||22 May 2018|
Dr Ana Rincon-Aznar of National Institute of Economic and Social Research is giving a seminar presentation during the International Business and Strategy lunchtime seminar series on 23rd May, at 13.00-14.30 in room 108, Henley Business School.
Below the Aggregate: A Detailed Account of the UK Productivity Puzzle
Productivity in the UK slowed down markedly in the aftermath of the Great Recession. Ten years on, productivity growth remains weak and below the rates achieved in the years leading up to the recession. In other developed economies, including the US, France and Germany, productivity has recovered more strongly than in the UK and, therefore, the productivity gap with respect to these continues to widen. The behaviour of aggregate productivity often masks stark heterogeneities but little is known about the sectoral drivers of this dismal productivity performance. In this paper, we provide a detailed mapping of sectoral developments in the UK economy, looking at 57 sectors during the period 1998-2015. We document developments in sectoral output, labour productivity and total factor productivity and assess the sectoral contributions to aggregate performance and, in particular, to the UK productivity slowdown. We assess the contributions of capital-deepening, labour quality and multi-factor productivity. A careful mapping of the developing structure of the UK economy is thus a very useful addition to the overall evidence base, providing a tool that might assist in the effective design of economic growth strategies. In addition to understanding differences in industry productivity, we study in more depth the impact of a changing industry structure on aggregate productivity growth patterns and the extent to which weak aggregate labour productivity growth may be the reflection of movement of resources from high productivity to low productivity industries. We extend the analysis internationally, benchmarking productivity and competitiveness in UK sectors to that in other relevant countries so as to establish the comparative advantage of different UK activities internationally. We find that most industries in the UK experienced a reduction in productivity growth since the financial crisis, but a handful of industries account for the majority of weakness in current productivity growth. Measurement issues may also contribute to explain the magnitude of the productivity growth gap.