1.2.2 - Productivity and division of labour
Learn how to measure output per input, explain improvements in land, labour and capital, and weigh how dividing work into specialist tasks affects workers and businesses.
Measuring productivity
Producing more is not necessarily becoming more productive. Productivity is output per unit of input over a stated period. Labour productivity can be measured as output per worker or output per hour worked.
Labour productivity
An illustrative workshop makes 480 chairs in a week using 12 workers. Output per worker is chairs per worker per week. If it makes 600 chairs using 15 workers, productivity is still . Output rose because more workers were used, without a rise in output per worker. If the original 12 workers instead make 600 chairs, productivity becomes .
For an hourly comparison, use total hours rather than the hours of only one worker. Six workers each working 20 hours supply 120 labour hours. If they produce 360 units, productivity is units per labour hour. Compare like periods and comparable output quality: producing more faulty chairs is not necessarily an improvement in useful production.
Raising land productivity
More useful output from a given area of land can raise land productivity. A farmer may improve growing conditions rather than simply acquire a larger farm.
Fertiliser supplies nutrients that help crops grow, potentially increasing yield per hectare. Drainage removes excess water from waterlogged ground, allowing roots to grow and machinery to operate. Irrigation supplies water when rainfall is insufficient, reducing crop losses and sometimes allowing more growing seasons. Reclamation brings previously unusable land into productive use, for example by making marshland suitable for farming.
Distinguish a change in total usable area from output per hectare. Reclamation can increase the quantity of usable land and total output; productivity rises only if output per measured unit of input also rises. Fertiliser or irrigation may increase yield on existing land, but their effectiveness depends on soil, crops and suitable management. Excess fertiliser or poorly planned irrigation can damage land, so more inputs do not guarantee an unlimited productivity increase.
Improving labour and capital
Workers can produce more per hour when they have better skills and effective equipment, but the resources must work together.
Human capital is the knowledge and skills embodied in people. Education can improve literacy, numeracy and problem solving; training can teach a worker to use a machine accurately. Fewer mistakes and faster, safer operation raise useful output per hour. An illustrative bakery training staff to control oven temperatures can reduce burnt batches without adding labour hours.
Migration can change labour quality and the skills available. Experienced engineers migrating to an economy may fill shortages, share techniques and help other workers use equipment better. An increase in worker numbers alone raises the quantity of labour rather than automatically raising labour productivity. The productivity effect depends on skills, matching workers to jobs, language and whether equipment and workplaces are available.
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