An example would be as follows: As relative wages change, firms substitute between different types of workers. This in turn changes the average productivity of the workforce. This composition effect is often referred to as a change in labor quality. Estimates of labor hours are relatively easy to compute by simply adding up the hours worked of all types of workers. Economics And Productivity As defined, physical productivity is the quantity of output produced by one unit of production input in a unit of time. In layman s terms, it could be an equipment which can produce 10 tons of output per hour. Economic productivity, on the other hand, is the value of output acquired from one unit of input. Some writers put in some qualitative indicators which create problems, although the rest confine the discussion of productivity to simple O/I (output and input) factors. Some of the productivity measurement techniques are the following. Mundel (1989) Mundel created a computer software package that evaluates productivity. ), speed loss (small stops, rough running, etc.) and quality loss (scrap, reworking, etc). The key to productivity improvement is to know what they are and how to solve them. Again, a production monitor must be set up to display these real-time losses. It will then enable teams to identify and correct problems as they occur in real time. This comprehensive approach in enhancing worker performance may capitalize on quality measures like value, TQM (total quality management), quality circles, innovations and performance standards (profitability, efficiency, customer satisfaction, on-time delivery) and carries a wide range of personal and team rewards and incentives. Labor productivity To date, however, there had been new studies conducted and published. These studies examined the link between labor productivity and a variety of workplace practices, capital and computers, both in the manufacturing and non-manufacturing sectors. In the conducted studies, the other issues factored in included the size and age of the business, material inputs, capital stock, workers experience, and capacity utilization.