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By Guy ERTZ, Deputy Global CIO - BNP Paribas Wealth Management
The measurement issues
Productivity is the primary driver of wealth creation and rising living standards. Higher productivity boosts GDP, which in turn supports higher real wages (corrected for inflation) and/or profits. However, measuring productivity—particularly distinguishing structural shifts from cyclical fluctuations—poses significant challenges. The most common metric is output per hour worked, calculated by dividing GDP by total hours worked. Yet this measure is volatile, influenced by both demand and supply factors, complicating its interpretation.
Supply versus demand driven productivity gains
Supply...
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