Definition
Labor productivity is commonly measured as output per hour worked. Broader measures examine how efficiently labor and capital are used.
Political Dictionary
Productivity
Productivity measures output produced per unit of input.
Why It Matters
Productivity growth is a major source of rising wages and long-term living standards.
How It Works
Economists divide real output by labor hours or other inputs.
History
Industrialization, technology, management, infrastructure, and education have driven historical productivity gains.
Example
New software may allow workers to produce more in the same amount of time.
Common Misconceptions
- Productivity means employees work harder.
- Higher productivity always reduces employment.
- Every technology investment raises productivity immediately.
Related Terms
- Fiscal Policy
- Monetary Policy
- Inflation
- Economic Growth
- Government Spending
Related Topics
See Also