Labor productivity

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Labour productivity USA, Japan, FRG

Labour productivity is generally speaking held to be the same as the "average product of labour" (average output per worker or per worker-hour, an output which could be measured in physical terms or in price terms).

It is not the same as the marginal product of labour, which refers to the increase in output that results from a corresponding increase in labour input.

However, some aspects of labour productivity may be very difficult to measure exactly, or in an unbiased way, such as:

the intensity of labour-effort, and the quality of labour effort generally.
the creative activity involved in producing technical innovations.
the relative efficiency gains resulting from different systems of management, organisation, co-ordination or engineering.
the productive effects of some forms of labour on other forms of labour.

One important reason is that these aspects of productivity refer mainly to its qualitative, rather than quantitative, dimensions. We might be able to observe definite increases in output, even though we do not know what those increases should be attributed to.

This insight becomes particularly important when a large part of what is produced in an economy consists of services. Management may be very preoccupied with the productivity of employees, but the productivity gains of management itself might be very difficult to prove.

This may mean that a lot of what is said about productivity is based on opinion, rather than empirical evidence. Modern management literature emphasizes the important effect of the overall work culture or organisational culture that an enterprise has. But again the specific effects of any particular culture on productivity may be unprovable.