Why wages and productivity look set to diverge further

PRODUCTIVITY growth is pretty much all that matters in the long run. Without innovations and new technologies – many of which we now take for granted, such as clothes and flushable toilets – life would be nasty, brutish and short.

Indeed, for most humans throughout history, their time on Earth was something resembling that.

According to economic theory, productivity and real wages should grow in tandem, with the benefits of new technology being shared with the workers who produce the stuff. But in the US, Europe and Japan, pay growth has decoupled from productivity growth, with the latter having pulled ahead.