WHAT IS 'Aggregate Hours'

Aggregate hours are the sum of the hours worked by all employed people, either full or part time, during the course of a year. Aggregate hours can also refer to the total hours worked by one sector or group of workers.

BREAKING DOWN 'Aggregate Hours'

Aggregate hours refer to a measure of the total labor required to produce real Gross Domestic Product (GDP). Aggregate hours generally provide a better measure for total labor than the number of people employed because they are a measure of a total number of hours. Between the overtime hours, part-time and full-time jobs, the number of people employed cannot provide as accurate a quantifiable measure of total labor as aggregate hours can. The U.S. Department of Labor keeps statistics on the sum of all hours worked by full and part-time workers across or within all industries.

The Department of Labor calculates the indexes of aggregate weekly hours by dividing the current month’s estimates of aggregate hours by the corresponding 2007 annual aggregate hours. Aggregate hours estimates are the product of estimates of average weekly hours and employment. Aggregate payrolls estimates are the product of estimates of average hourly earnings, average weekly hours, and employment.

Aggregate Hours and Real Gross Domestic Product (GDP)

Real GDP is a macroeconomic, inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year. Unlike nominal GDP, real GDP can account for changes in price level and provide a more accurate figure of economic growth. Aggregate hours are part of total labor calculations required to determine real GDP.

For example, faster payroll growth and an increase in average weekly hours can drive aggregate hours up. Assuming stable productivity, more hours worked would mean more output. Therefore, if workers are producing the same amount of goods or services per hour, and are working more hours, than real GDP is higher.

Real GDP differs from nominal GDP in that real GDP is adjusted for inflation while nominal GDP is not. As a result, nominal GDP will often appear higher than real GDP. Nominal values of GDP and other income measures from different time periods can differ due to changes in quantities of goods and services or changes in general price levels. As a result, taking price levels and inflation into account is necessary when making comparisons between different time periods. Values for real GDP are adjusted for differences in prices levels, while figures for nominal GDP are not.

RELATED TERMS
  1. Real Gross Domestic Product (GDP)

    Real gross domestic product is an inflation-adjusted measure ...
  2. Nominal Gross Domestic Product

    Nominal gross domestic product measures the value of all finished ...
  3. Aggregate Demand

    Aggregate demand is the total amount of goods and services demanded ...
  4. Productivity

    Productivity measures the efficiency of production in macroeconomics, ...
  5. Stock Market Capitalization To ...

    The stock market capitalization to GDP ratio is used to determine ...
  6. Per Capita GDP

    Per capita GDP is the measure of a country's output that shows ...
Related Articles
  1. Insights

    Explaining The World Through Macroeconomic Analysis

    From unemployment and inflation to government policy, learn what macroeconomics measures and how it affects everyone.
  2. Insights

    U.S. GDP Better than Expected in Fourth Quarter

    U.S. GDP growth for the fourth quarter came in at a 1.0% seasonally adjusted annual rate, according to the Commerce Department's second estimate, issued Friday morning.
  3. Insights

    Deadly Flaws in Major Market Indicators

    These indicators give investors and experts some data to work with, but they're far from perfect.
  4. Insights

    The Importance Of Inflation And GDP

    Learn the underlying theories behind these concepts and what they can mean for your portfolio.
  5. Insights

    Cost-push inflation versus demand-pull inflation

    Gain a deeper understanding of aggregate supply and demand, forces which raise the price of goods and services.
  6. Insights

    How China's GDP Is Calculated

    China is the world’s second-largest economy based on its GDP figures. Investopedia explains the methodology behind China’s GDP calculation.
  7. Insights

    What the National Debt Means to You

    The U.S. deficit seems to grow every year. But how does national debt actually affect you?
RELATED FAQS
  1. How are aggregate demand and GDP related?

    See why aggregate demand and gross domestic product (GDP) are necessarily the same thing, according to Keynesian macroeconomic ... Read Answer >>
  2. Is real GDP a better index of economic performance than GDP?

    Learn why real GDP is a better index for expressing the output of an economy, as it takes into account the factors that distort ... Read Answer >>
  3. When do economists use real GDP instead of GDP?

    Learn about the purposes for which economists rely on real GDP. Find out how real GDP is calculated and how it is important ... Read Answer >>
  4. What is GDP and Why Is It So Important To Investors?

    The gross domestic product (GDP) is one the primary indicators used to gauge the health of a country's economy. What does ... Read Answer >>
  5. How can I use the rule of 70 to estimate a country's GDP growth?

    Find out about the rule of 70, what it is used for and how to use it to determine the number of years a country's GDP takes ... Read Answer >>
Trading Center