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This article reports some new perspectives on UK productivity up to 2010, using a large dataset assembled from firm-level micro-data. A central finding is that productivity performance over 2008-10 has varied widely, by industry, firm size and a range of other firm-level characteristics. Our evidence suggests that the productivity conundrum is more pronounced in services (excluding the financial and communications sectors) than in manufacturing, and that labour productivity performance in 2010 was weaker among smaller firms than larger firms across all sectors. This is also the case using a broader measure of productivity, taking account of capital inputs at the firm level.
Other things equal, firms that export, or are part of a multi-national enterprise, or report higher levels of ICT maturity demonstrate systematically stronger performance over the recession across all sectors than firms which do not have these characteristics. However, we find less evidence that recent productivity performance is related to prior growth rates of firm employment or a measure of firm-level innovation.
In common with other micro-data research we find evidence of large and persistent variation in productivity across firms. Our results suggest that the impact of the economic downturn in 2008-09 has been more apparent among high productivity than low productivity service sector firms, while the reverse is the case in the high-tech sector, where high productivity firms have been little affected. There is also some evidence that the level of productivity below which firms exit the industry has fallen over the recession.
This article looks at the UK productivity conundrum from the micro-data perspective.