Productivity

Loading the player...

What is 'Productivity'

Productivity is an economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in revenues and other GDP components such as business inventories. Productivity measures may be examined collectively (across the whole economy) or viewed industry by industry to examine trends in labor growth, wage levels and technological improvement.

BREAKING DOWN 'Productivity'

Productivity gains are vital to the economy because they allow us to accomplish more with less. Capital and labor are both scarce resources, so maximizing their impact is always a core concern of modern business. Productivity enhancements come from technology advances, such as computers and the internet, supply chain and logistics improvements, and increased skill levels within the workforce.

Productivity is measured and tracked by many economists as a clue for predicting future levels of GDP growth. The productivity measure commonly reported through the media is based on the ratio of GDP to total hours worked in the economy during a measuring period; this productivity measure is produced by the Bureau of Labor Statistics four times per year.

RELATED TERMS
  1. Labor Productivity

    A measurement of economic growth of a country. Labor productivity ...
  2. Human Capital

    A measure of the economic value of an employee's skill set. This ...
  3. Labor Market

    The labor market refers to the supply and demand for labor, in ...
  4. Gross Domestic Product - GDP

    The monetary value of all the finished goods and services produced ...
  5. External Diseconomies Of Scale

    External factors beyond the control of a company increases its ...
  6. Labor Intensive

    A process or industry that requires a large amount of labor to ...
Related Articles
  1. Retirement

    Economic Indicators: Productivity Report

    By Ryan Barnes Release Date: Approximately five weeks after previous quarter's end Release Time: 8:30am Eastern Standard Time ...
  2. Economics

    How The GDP Of The US Is Calculated

    The US GDP may not be a perfect economic measure, but the ability to compare it to prior periods and other countries makes it the most applicable.
  3. Investing News

    Have Productivity Gains Disappeared for Good?

    Forty years after the first personal computers were commercially sold, and 22 years after the World Wide Web became available free of charge, it is still an unresolved matter in economics whether ...
  4. Forex

    What Is GDP?

    GDP is like a price tag on a country's output, and it measures the size of the economy. Find out what it means.
  5. Economics

    How Demographics Drive The Economy

    Demographics can have a profound effect on the economy. An aging population coupled with a declining birthrate points to a decline in economic growth.
  6. Personal Finance

    Does a Shorter Work Week Lead to Greater Productivity?

    While technology has significantly increased labor productivity, institutional changes, such as a shorter work week, could also be very productive.
  7. Economics

    Explaining The World With Macroeconomic Analysis

    Macroeconomists try to forecast economic conditions to help consumers, firms and governments make better decisions.
  8. Fundamental Analysis

    How Globalization Affects Developed Countries

    The increase in communications technology has companies competing in a global market.
  9. Economics

    What Are Economies Of Scale?

    Is bigger always better? Read up on the important and often misunderstood concept of economies of scale.
  10. Fundamental Analysis

    Deadly Flaws In Major Market Indicators

    These indicators give investors and experts some data to work with, but they're far from perfect measures.
RELATED FAQS
  1. What kinds of productivity data does the Bureau of Labor Statistics keep?

    Learn about the types of productivity data kept by the Bureau of Labor Statistics, including labor productivity and multifactor ... Read Answer >>
  2. How is productivity calculated?

    Learn about productivity, what productivity measures and how to compute a company's productivity level by measuring its outputs ... Read Answer >>
  3. What are the best measurements of economic growth

    Learn how economists and statisticians track economic growth and why GDP might not be the best measurement of real economic ... Read Answer >>
  4. Why is productivity an important concept in economics?

    See why the concept of productivity is so crucial to understanding economic growth, and why a standard of living directly ... Read Answer >>
  5. What are key economic growth rates that can be used to determine the economic health ...

    Discover the indicators that correlate with real economic health, and learn why many traditional metrics do not function ... Read Answer >>
  6. How does the United States government measure economic growth?

    Find out how the Bureau of Labor Statistics and the Bureau of Economic Analysis measure economic growth in the United States ... Read Answer >>
Hot Definitions
  1. MACD Technical Indicator

    Moving Average Convergence Divergence (or MACD) is a trend-following momentum indicator that shows the relationship between ...
  2. Over-The-Counter - OTC

    Over-The-Counter (or OTC) is a security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, ...
  3. Quarter - Q1, Q2, Q3, Q4

    A three-month period on a financial calendar that acts as a basis for the reporting of earnings and the paying of dividends.
  4. Weighted Average Cost Of Capital - WACC

    Weighted average cost of capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is ...
  5. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
  6. Sharing Economy

    An economic model in which individuals are able to borrow or rent assets owned by someone else.
Trading Center