Would an increase in the productivity of labor lead to an increase or a decrease in the demand for labor?



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Posted on (Answer #1)

This is a good question and given your data, the answer is not conclusive. 

If there is greater productivity in labor, then you need less labor to achieve the same level of productivity. From this perspective, you need less labor. So, if the demand is the same for a given product, then there is also a decrease in demand for labor. 

With that said, it possible that the opposite can be true as well. If the demand for the product increases, then there will be an increased need for the labor to meet that demand. 

In short, the answer all depends on the supply and demand of the product. 

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