Individual labor productivity


Labor productivity is defined as the output from a person's effort in a given activity, and is a key concept in economic development. In neoclassical economic models such as the Solow model, the long-term economic growth of countries is driven by increases in society's productivity. The absence of economic development in places like sub-Saharan Africa can be partly thought of in terms of labor productivity. Lack of access to technology combined with lack of education and poor health reduce the productivity of workers throughout much of Africa, so an hour of labor in Africa translates into far less output when compared with an hour of labor in Asia, Latin America, or the developed world. Since working individuals are paid in proportion to the amount that they produce, more productive individuals will tend to capture higher wages. Africa's labor force, on average, captures the lowest wages in the world, and societies are unable to invest in their own health, education, and technology, thus perpetuating the low productivity.

In the MV Sim, a person's productivity affects how an hour of his or her labor translates into agricultural production, fish caught, fuelwood collected, or small business income. Productivity is determined by the person's health, years of education, and age. Healthier and more educated individuals have higher productivity, while productivity begins to decline in old age.

The family's labor productivity is simply the average of the different members' productivities, weighted by how many hours each is working. It is this family labor productivity that is used to calculate the family's production in agriculture, fishing, fuelwood collection, or small business income.