Since the financial crisis of 2008, the UK has suffered from a persistent lag in productivity growth compared to its historical trend and international competitors. This phenomenon, often referred to as the 'productivity puzzle', has significant implications for long-run economic growth and living standards. Some economists attribute this slow growth in output per hour worked to low levels of capital investment and a skills shortage in key sectors.
Despite steady increases in employment levels since 2012, average wages have remained sluggish because of this weak growth in labour productivity. Indeed, unless the efficiency with which resources are combined in the production process improves, the UK is likely to face stagnating real incomes and limited fiscal space for public services in the decade ahead.
Define the term 'labour productivity' (Extract B, line 6).
156 exam-style questions on AQA A Level Economics 1.4 Production, costs and revenue, covering 1.4.1 Production and productivity, 1.4.2 Specialisation, division of labour and exchange, 1.4.3 The law of diminishing returns and returns to scale (A-level only), 1.4.4 Costs of production, 1.4.5 Economies and diseconomies of scale, 1.4.6 Marginal, average and total revenue, 1.4.7 Profit, and 1.4.8 Technological change (A-level only). Each one has a worked solution and a mark scheme showing where the marks go.