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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
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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....
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This note was uploaded on 11/10/2011 for the course ECON 4310 taught by Professor Staff during the Fall '08 term at Kennesaw.

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