Diagnosing the UK Productivity Slowdown: Which Sectors Matter and Why?

Coyle, D. and Mei, J. 2023. Diagnosing the UK Productivity Slowdown: Which Sectors Matter and Why? Economica. 90 (359), pp. 707-1088. https://doi.org/10.1111/ecca.12459

TitleDiagnosing the UK Productivity Slowdown: Which Sectors Matter and Why?
TypeJournal article
AuthorsCoyle, D. and Mei, J.
Abstract

This paper explores the slowdown in labour productivity growth in the UK and other advanced economies by decomposing its growth into contributions from different sectors of the economy, looking at both within-industry productivity growth and labour reallocation between sectors. We find that the within-industry contribution is the main source of the slowdown. Comparing trends pre- and post-2008, the aggregate productivity slowdown can be attributed largely to the manufacturing sector and the information and communication (ICT) sector. Disaggregating further, the UK productivity growth slowdown can be attributed mainly to transport equipment and pharmaceuticals within manufacturing, and computer software and telecommunications within ICT. Strikingly, these are advanced, high value-added sectors considered to be strengths of the UK economy. Looking across other advanced economies, our results confirm that manufacturing and ICT sectors are the main drivers of the slowdown, to differing degrees. Part of the explanation for the slowdown in in these sectors may relate to the underlying question of how to construct deflators for a modern economy when technological and structural changes are leading to large relative price shifts. The structure and supply chains of the key slowdown sectors also merit further investigation.

JournalEconomica
Journal citation90 (359), pp. 707-1088
ISSN0013-0427
1468-0335
Year2023
PublisherWiley
Publisher's version
License
CC BY 4.0
File Access Level
Open (open metadata and files)
Digital Object Identifier (DOI)https://doi.org/10.1111/ecca.12459
Publication dates
Published in printJul 2023
Published online13 Jan 2023

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