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Real wage and productivity stagnation

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  • Machin, Stephen

Abstract

The UK’s economic performance since the global financial crisis has seen real wage growth stagnating for over fifteen years and weak productivity growth with most, but not all, of the wage stagnation overlapping with the productivity slowdown. This paper studies these stagnation patterns in detail for the UK, and places them in international context where the country does not fare well as it both drops down wage and productivity growth rankings across countries. There has been a longer term decline in the influence of labour market institutions in affecting worker wages as the changing balance of power between workers and employers has played a role in the emerging wedge between wage and productivity growth in the stagnation period. The paper concludes with a policy related discussion of possible sources where sustained wage growth could re-emerge, and thereby generate improvements in living standards, in the future.

Suggested Citation

  • Machin, Stephen, 2025. "Real wage and productivity stagnation," LSE Research Online Documents on Economics 127594, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:127594
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    More about this item

    Keywords

    real wage growth; productivity growth; employer and worker power;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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