The increases in productivity can be explained through the combined actions of three forces:
improved quality of the labor and superior performances of the human resource increased quantities of organizational capitals higher efficiency of the labor process, including such forces as technological developments, socio-cultural changes, the creation of scale economies or the reallocation of labor
Cyclic Changes in Productivity
However it has been established the generalized growth tendency on the long run, the study of short terms presents the reader with evidence of cyclic behaviors in labor productivity. To better understand - the labor productivity decreases during times of economic difficulties and increases in periods of boom or economic recovery. There are various reasons why the cyclic trend is revealed in the short run; the most important three such reasons are the modifications in using labor, modifications in the usage of equipments and finally, changes in the formation of the aggregate output.
In terms of labor utilization it can be said that in times of recession, employees shift away from manufacturing to services (such as maintenance of the goods previously produced) - as a result, labor productivity decreases. In terms of plant and equipments, it has been observed that in times of economic difficulties, manufacturers do not use their gadgets at maximum capacity, once again generating a reduction in labor productivity.
Productivity and Employment
The existence of a relationship between labor productivity and employment patters has been debated for years. A common belief relative to this relationship was that increases in productivity (and labor force efficiency) imply a reduced need for labor force and therefore generate the loss of jobs and increased unemployment rates. In order to make a most informed statement, numerous scholars and practitioners have conducted studies within a multitude of industries. The results were however inconclusive and the final statement was that there is no actually observed relationship between employment and labor productivity.
Chapter 18: Employment and Unemployment
Employment and Unemployment Statistics
The statistical analyses are generally conducted by the Bureau of Census and their results are most often relevant. In order to make sure of the relevance of the statistical findings, one has to make the clear distinction between employed and unemployed individuals. They must then correlate it with the entire population, as well as the entire labor force.
In the U.S., the employment-population rate has been increasing for nearly five decades, whereas the unemployment rate has fluctuated significantly for the same period.
Macroeconomic Output and Employment Determination
In order to answer the questions of this subchapter, the author defines the concepts of aggregate supply and aggregate...
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