October/November 2007

Question 4
(A)Explain,with example,why labour productivity might vary between countries
Productivity is an average measure of the efficiency of production. Labor productivity measures the amount of
goods and services produced by one hour of labor. More specifically, labor productivity measures the amount of
real GDP produced by an hour of labor. Growing labor productivity depends on three main factors: investment
and saving in physical capital, new technology and human capital.
Factors affecting the labour productivity?

Amount of capital
Quantity of capital
Skill of workers
Education of labour
Technology
Attitude of workers

Labour productivity =total output/Total time taken

More developed economies such as Japan with skilled labour forces and automated system will be more
productive than developing economies such as Bangladesh relying on manpower with limited quantities of other
productive factors.If the worker has the ability and skilled,the more likely to earn as they are more trained or
have achieved higher qualification.In Japan the labour are more skilled therefore the productivity is higher
compared to Bangladesh.

The demand for labour will shift outward with better and more training and management.