Question

Brief summary of traditional economic theory about how to keep labor productivity high.

Answer 1

Labor productivity depends on number of factors the employers should focus on these factors to increase the marginal prodductivity of labor. These are

• the quality of labor employed - their skills, training provided, etc.
• the quality of other inputs - this implies the quality of physical capital and natural resources.

There can be differences between the productivities of the two labor groups and they can arise due to the different levels of education, training programs, level of capital investment in various sectors, and this also depends on the level and quality of infrastructure. To keep labor productivity high in a nation, the government should pay attention to these factors.