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Discussions on other threads got me thinking about how we measure "productivity". How Should Labor Productivity Be Measured? (St. Louis Fed blog) "Gross domestic product (GDP) per capita is often used as the barometer when comparing labor productivity and the standard of living across countries." In other words, divide the GDP by the number of people - but does that really make sense? It gives some information, but it doesn't really measure the "effectiveness" of an economy, does it? And it is skewed by a number of irrelevant factors, like birth rate, that give a premium to first world economies where the birthrate is low; and does not factor in (consistently) non-native labor.
Citing an article by Ana Maria Santacreu, Measuring Labor Productivity: Technology and the Labor Supply, an economist with the St. Louis Fed, the article compares the productivity of a number of nations using the metric of GDP per hour (rather than GDP per capita), with interesting results.
I found this development fascinating, as it helps explain the disparity between labor-intensive economies (like in Asia and Latin America) and technologically-advanced economies, like North America's and Europe's.
Citing an article by Ana Maria Santacreu, Measuring Labor Productivity: Technology and the Labor Supply, an economist with the St. Louis Fed, the article compares the productivity of a number of nations using the metric of GDP per hour (rather than GDP per capita), with interesting results.
Noting that in most economic growth models "differences in productivity are mainly driven by technological differences", she asserts that, "GDP per hour worked, therefore, rather than GDP per capita, may be a better measure of labor productivity because it captures technology."Interestingly, the two GDP measures can differ widely within a given country and relative to the United States. For instance, in 2013, Spain's GDP per capita was about 57 percent of that of the United States, while its GDP per hour was much closer—about 74 percent of the U.S. level. Singapore's GDP per capita, on the other hand, was 16 percent higher than that of the United States, while its GDP per hour was 62 percent of the U.S. level.
I found this development fascinating, as it helps explain the disparity between labor-intensive economies (like in Asia and Latin America) and technologically-advanced economies, like North America's and Europe's.
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