Economic Productivity Needs to be Studied in Physical Terms

Where the Analysis Cuts Short

Macroeconomics is a study of accounting for various factors, mostly as components of national income. The author followed those division to a very meticulous detail when accounting for the changes in economic product. Beyond that, there were a lot of details to teasing out the hourly productivity from the overall economic product, which involves correcting for hours worked and labor force participation rate over several historical shifts like women entering the workforce.

Relevance of Labor Productivity for our Future

These are no small potatoes either. Given the economic headwinds we fact, we should want to obtain substantial productivity growth for the future to keep up with our expectations. This is exactly what our politicians should want, and there’s a question on the table of whether we’re willing to do what it takes to get that growth. Or, for that matter, is this even something we can affect? I think the answer is “yes”.

  • Economies of scale (improved productivity through specialization)
  • Direct efficiency improvement through sustaining innovation
  • Replacement of certain roles with new, more productive, technologies, what I would call disruptive innovation
  • Expansion of economic inputs other than labor

Emerging Efforts

The kind of productivity accounting I’m talking about is hard. New more highly data-driven economics may play a very big role in this, and a project with has always been a big inspiration to me is the Atlas of Economic Complexity.

 by the author.



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