Growth in productivity means an economy can produce more without needing to use more inputs. As such, it is one of the most fundamental drivers of improvements in living standards, allowing people to enjoy more, or better quality, goods and services.
Historically, productivity has grown steadily over time, allowing real (i.e. adjusted for inflation) wages and living standards to follow suit. Since the 2008 financial crises, however, productivity growth has diverged from its long run trend, and stagnated – the reason for this change in trend is what is known as the ‘productivity puzzle’.