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No, it's a measure of a weighted average quantity of output of goods and services (not of money) compared with the quantity of labor input.
by boole1854 4y ago
No, it's a measure of a weighted average quantity of output of goods and services (not of money) compared with the quantity of labor input.
- mcguire 4y ago"Quantity of output goods" is measured in dollars, as mediated by the current price, no?
- boole1854 4y agoNot in general, no. They do count the dollars, but they also measure the dollar-to-quantity ratios of various goods and services. The final productivity measure is based on these adjustments. So if the amount of money that is exchanging hands goes up but the amount of goods and services produced stays the same, then the measured productivity does not go up. You may be thinking about how GDP is calculated, specifically regarding government employees. For this category of spending, the "quantity" measured for the dollars-to-quantity ratio is simply the number of government employees. So as long as the government is hiring more people, the money they spend on those people counts towards real GDP, regardless of what those people are doing. However, government spending is not used in calculating productivity, which measures only certain parts of the private sector where it is possible to also measure output of goods and services instead of relying on measures like 'employee counting'.