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In order to increase labor productivity, we have to increase the amount and/or the quality of capital that we use. We use labor and capital to make products, so the only way to increase the productivity of labor is to make the capital better and/or increase it.
One may to make the capital better is to invent better tools. In the case of the production of computer games, if the games come on physical DVDs, we could increase a worker’s productivity by having a machine that will burn more DVD’s per hour.
Another way to increase worker productivity is to have more capital. Let’s say that we notice that the worker is tending one DVD burning machine, but that they actually have time to tend two. We buy another DVD burning machine and increase the worker’s productivity.
Not all capital consists of machines. Workers’ skills and ideas are part of what is called human capital. If we educate or train our workers more effectively, we can increase their productivity. For example, if we have programmers coming up with code for the new computer games, we can increase their productivity by giving them more training so they will know more about coding.
Finally, we could increase worker productivity by doing a better job of managing the workers. Let us say that we have a manager who antagonizes the programmers or lowers their morale. By changing that manager’s style of management, we can make the workers happier and hopefully increase their productivity. This is particularly true of people who are doing “brain work.” We could also manage the workers better by finding more efficient ways to use the capital that we have. We might, for example, split up the job that the workers are doing into more specialized tasks, allowing each worker to do their job more quickly.
All of these are possible ways to increase labor productivity.
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