Labor Productivity

INTRODUCTION

The subject of statistics involves the study of how to collect, summarize, and interpret data (Bowerman, 2010). Descriptive statistics summarize the population data by describing what was observed in the sample numerically or graphically. Numerical descriptors include mean and standard deviation for continuous data types, while frequency and percentage are more useful in terms of describing categorical data. Inferential statistics uses patterns in the sample data to draw inferences about the population represented, accounting for randomness. These inferences may take the form of answering yes/no questions about the data, estimation, correlation, regression, extrapolation, or interpolation. Labor productivity is a necessary element to summarize and produce statistical data for.

LABOR PRODUCTIVITY

Productivity is a measure of economic efficiency which shows how effectively economic inputs are converted into output. Labor productivity can be measured for a firm, a process or a country. Production is a process of combining various material inputs and immaterial inputs in order to make something for consumption. The methods of combining the inputs of production in the process of making output are called technology. Technology can be depicted mathematically by the production function which describes the relation between input and output. The production function can be used as a measure of relative performance when comparing technologies.

One striking aspect of recent U.S. economic history has been the vigorous growth in labor productivity. Between 1995 and 2006, the nation’s labor productivity, or output per hour worked, grew at an average annual rate of 2.7 percent, well above its 1947–1995 average of 2.1 percent. The acceleration occurred despite several shocks that buffeted the economy during the period—a recession, two wars, terrorists’ attacks, corporate governance scandals, and a sharp increase in the price of oil.1 More recently, productivity...