Inequality, well-being and (inclusive) productivity growth

This chapter focuses on current evidence regarding the links between productivity and well-being, inequality and inclusive growth. In the UK the slowdown in productivity growth since the financial crisis has been accompanied by stagnating real wages, rising income and wealth inequality, and austerity. The chapter elaborates on the risk of a potentially ‘vicious cycle’ that may undermine efforts to improve productivity and economic growth, and as such may risk further polarisation of the benefits of improved productivity by exploring key thematic areas. From the analysis, the following themes and areas would appear to be paramount for delivering inclusive productivity growth in the UK: the productivity-related effects of hysteresis, particularly the long-term scarring effect of the financial crisis on regional labour market polarisation; the need for international comparative analysis; demand-led productivity growth and the role of inequality; ways to best manage the productivity gains from digital and technological diffusion to support, rather than undermine, inclusive growth; consideration of ‘soft’ infrastructure and pre-market and non-market factors which affect inclusive productivity growth, including the care economy