Question

There are 5 reasons why an economy/workforce may be more productive than others that we discussed in class. Pick 2 reasons that you think are the biggest factors in productivity and discuss your rationale.

Answer 1

The human capital is the main determinant of labor productivity. Human capital is the accumulated knowledge (from education and experience), skills , and expertise possessed by the average economic worker. Generally the higher the average level of education in an economy, the higher the human resources produced and the higher the productivity of labour.

The second driving factor for labor efficiency is technological transition. Technological development is a mixture of invention — knowledge advances — and advancement that brings the advance into use in a new product or service. In 1947 for instance, the transistor was invented. It helped us to miniaturize the footprint of electronic devices and use less power than the preceding tube technology. Since then, advances have created smaller and better transistors that are omnipresent in such varied items as smartphones , computers, and escalators. The transistor technology has allowed staff with smaller devices to be anywhere.