Wednesday, August 19, 2015

Indices of Labor Productivity

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The growth of labor productivity of an industry (for an individual product) can be expressed in physical terms by the index-
Ili = (qli/Tli)/(qoi/Toi) ------(i)
Where,
Ili = Index for the growth of labor productivity of the ith product.
qli = Quantity of the ith product during the current period
qoi = Quantity of the ith product during the base period
Tli = Production time for the ith product during the current period
Toi = Production time for the ith product during the base period
Index → a measure

The overall index for the growth of labor productivity can be obtained by taking the weighted average of these individual index, the weights being are the current production time. It is calculated as -
Where, Il = The overall index for the growth of labor productivity.
i = 1, 2, ..., k (k is the no. of products produced by an industry)
Example:
If Il = 1.1708, then the labor productivity is increased 17% (almost) in the current period than the base period.
Value Index of Labor productivity (Il):
Where, Ili = (qli/Tli)/(qoi/Toi)
Cli = Price of output for the ith product at current period.

Price Index of Labor Productivity (Pll):
Where, Pll = Price Index of labor productivity
q1i = Physical output of the ith product during the current period.
qoi = Physical output of the ith product during the base period.
pi = Money value for the ith product per unit of output in comparable price (current period)
Tli = The average number of listed workers in the current period
Toi = The average number of listed workers in the base period

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