So these are some of the factors that have weakened the link between productivity and living standards in recent years. In the long run, however, productivity is, without a doubt, the key element contributing to our prosperity. Productivity growth is the foundation for real income growth - it allows businesses to pay higher real wages and still keep costs down and remain profitable.
There is one important difference between productivity and the other factors that influence our living standards. The difference is that there are no constraints on productivity and its ability to contribute to improvements in our welfare on a sustained basis. The other factors are constrained by physical, institutional, and legal limitations.