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December, 1986, Vol. 109, No. 12
Problems encountered in measuring
single- and multifactor productivity
The slowdown in productivity growth since the early 1970's in many countries has stimulated and renewed interest in the causes of productivity change. The observation that there has been a slowdown has generally centered on the traditional indicator of productivityoutput per unit of labor input, or labor productivity.
Labor productivitythe relationship between output and labor inputhas been the most prevalent measure of productivity for a variety of reasons. First, labor is involved in all aspects of production and generally has been the most important factor in the production process. Second, labor input is the most readily measurable of the various production factors.
Labor productivity measures are useful in that they provide quantitative indicators of the amount of change in labor expended to produce real goods and services of an enterprise, industry, or economy. Changes in output per hour, however, do not measure the specific contribution of labor or any other factor of production. Instead, they reflect the joint effects of many influences which affect the use of labor, including changes in technology, capital investment, utilization of capacity, economies of scale, energy substitution, organization of production, and managerial skills, as well as changes in the characteristics and efforts of the work force.
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