Saintly Devil
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How does low productivity lead to low per capita income?
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- Thread starter Saintly Devil
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AGB
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say for example that labour productivity has decreased. firms would not be getting the same ouput per unit of labour as they previously were. therefore the wage level would go down as wages are the return for labour resources
as an analogy.... some investors buy shares for return. if they expected the return to be 10%p.a. then they may pay $2 for the share. however, if the projected return fell to 5%p.a. then obviously demand for the share would fall, thus decreasing its price......
so as productivity falls, so does the demand for labour, thus reducing the wage rate
as an analogy.... some investors buy shares for return. if they expected the return to be 10%p.a. then they may pay $2 for the share. however, if the projected return fell to 5%p.a. then obviously demand for the share would fall, thus decreasing its price......
so as productivity falls, so does the demand for labour, thus reducing the wage rate