What Is Labor Productivity?

Labor productivity measures the hourly output of a country's economy, showing the amount of real gross domestic product (GDP) produced by an hour of labor. Growth in labor productivity is driven by saving and investment in physical capital, new technology, and human capital. It is calculated by dividing the total output by the total number of labor hours. Labor productivity is directly linked to improved standards of living and can indicate short-term and cyclical changes in an economy, possibly even turnaround.
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