Real wages and productivity in the UK have stagnated since 2007, whereas employment has risen considerably. Many commentators lament the consequent failure of `living standards’ to rise at historical rates. But real GDP per capita has grown by more than 20% since 2000 despite the Great Recession, so aggregate living standards have in fact risen. This column resolves the apparent paradox.
Castle, J.L., Hendry, D.F. & Martinez, A.B. (2020). ‘The Paradox of Stagnant Real Wages yet Rising `Living Standards’ in the UK’. Vox EU.