DEFINITION of ‘Labour Productivity’
A measurement of economic growth of a country. Labour productivity measures the amount of goods and services produced by one hour of labour. More specifically, labour productivity measures the amount of real GDP produced by an hour of labour. Growing labour productivity depends on three main factors: investment and saving in physical capital, new technology and human capital.
INVESTOPEDIA EXPLAINS ‘Labour Productivity’
For example, suppose the real GDP of an economy is $10 trillion and the aggregate hours of labour in the country was 300 billion. The labour productivity would be $10 trillion divided by 300 billion, equalling about $33 per labour hour. Growth in this labour productivity number can usually be interpreted as improvements or rising standards of living in the country.