This note responds to a critique of our recent paper, “Can Intangible Investment Explain the UK Productivity Puzzle?”. In that critique Martin and Rowthorn (MR) present a re-working of data on labour composition which they feel refutes an element of our argument. In this response we argue that the data are still in support of our original position. Essentially, the puzzle is that measured labour productivity has been falling, but labour quality is rising, so, at least on this measure, changes in labour quality cannot explain falling productivity.
FranklinM.MistryP. (2013), Quality-Adjusted Labour Input: Estimates to 2011 and First Estimates to 2012, Office for National Statistics, July.
2.
GoodridgeP.HaskelJ.WallisG. (2013), ‘Can intangible investment explain the UK productivity puzzle?, National Institute Economic Review, 224, May, R48–58.
3.
MartinB.RowthornR. (2012), ‘Is the British economy supply constrained? A renewed critique of productivity pessimism’, UK∼IRC, Centre for Business Research, University of Cambridge, May.
4.
MartinB.RowthornR. (2013), ‘Can intangible investment explain the UK productivity puzzle? A response and comment’, UK∼IRC, Centre for Business Research, University of Cambridge, July.
5.
OultonN. (2013), ‘Medium and long run prospects for UK growth in the aftermath of the financial crisis’, Centre for Economic Performance, London School of Economics, September.
