Comparing%2blabor%2bproducitivity%2bof%2bindustry%2bto%2bagriculture_rev2

Comparing%2blabor%2bproducitivity%2bof%2bindustry%2bto%2bagriculture_rev2

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
COMPARING LABOR PRODUCTIVITIES (INDUSTRY vs. AGRICULTURE) An Illustrative Example Real GDP or Output of Country A = $100 Million Output share of agriculture (as a percentage of GDP): 30% Output share of industry (as a percentage of GDP): 60% Total labor force size of Country A = 10 million workers Share of labor in agriculture: 70% or 7 Million Share of labor in industry: 10% or 1 Million Share of labor in services: 20% or 2 Million Productivity of labor in agriculture = (output of agricultural sector / labor in agriculture) We assume an 8 hour work day, 5 days per week Output of agricultural sector: 30% of total output x $100 Million total output = $30 Million Labor in agricultural sector: 70% of total labor force or 7 million workers $30 Million output / 7 million workers = $ 4.2857 worth of output per worker 30% / 70% = 0.42857
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: units of food / worker Productivity of labor in industry = (output of industrial sector / labor in industry) We assume an 8 hour work day, 5 days per week Output of industrial sector: 60% of total output x $100 Million output = $60 Million Labor in industrial sector: 10% of total labor force or 1 million workers $60 Million output / 1 million workers = $60.00 worth of output per worker 60% / 10% = 6.0000 units of manufactures / worker Relative productivity of industrial worker to that of agricultural worker $60 worth of output / $4.2857 worth of output = 14 to 1 6 / 0.42857 = 14 to 1 units of manufactures per unit of food With a productivity differential of 14 to 1, we can assume that labor employed in industry will tend to receive higher wages than labor employed in agriculture....
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern