Mark Mitchell and Robert Zymek
University of Edinburgh
It is now well understood that differences in labour productivity – the value of goods and services that can be produced in an average hour of work – explain many observable economic differences between countries. Evidence shows that that highly productive economies outperform their less productive counterparts in in terms of per-capita income, population health, subjective wellbeing, and state-capacity (Caselli, 2005; Jones, 2015; Sacks, et al., 2012). For this reason, it is a cause for concern that labour productivity in Scotland – just as in the UK as a whole – is fairly low compared with other advanced economies. It suggests that Scotland could do better, and improve the lives of its citizens by moving up the productivity tables.
In work published earlier this year by the David Hume Institute (Kelly, et al., 2018), we examined Scotland’s productivity performance in an international context. We found that relative to member countries of the OECD – a club of advanced economies – Scotland’s labour productivity is only middling: Scotland is more productivity than most poorer OECD countries; but it is less productivity than many of its EU neighbours, including countries such as Finland, Denmark, Belgium and Ireland.