[Aggie01]

Hi,

So I'm doing a French degree but as part of this I am doing a business module and this is my essay title.
I have never previously done economics and am slightly lost. I've got the whole if productivity is bad more people are employed to boost it, profits rise, the company invest, the workers consume and we get growth.

Also got that once a country has good growth they want to keep a good balance between employment and growth by having a reasonably high minimum wage etc.

The problem is this will probably take 2 paragraphs at most and, after this, I'm not really sure where to go with it.

If anyone has any suggestions on something I could read or what direction I could take it would be greatly appreciated.

Thanks!

[Classical Liberal]

(Original post by Aggie01)
I've got the whole if productivity is bad more people are employed to boost it, profits rise, the company invest, the workers consume and we get growth.

Seems like absolute nonsense to me. Can you explain that?

Also got that once a country has good growth they want to keep a good balance between employment and growth by having a reasonably high minimum wage etc.

Seems like nonsense again.


If you become more productive that means your output rises whilst the amount of input stays the same. So if we become more productive. Work the same amount of time (input). What happens to output?

In essence,

[Aggie01]

Ok, as I said I'm really not sure about this, it's just what I got from class notes..I think it was saying that if a company's productivity is low then they'll employ more people to try and produce more. By producing more their profits rise and by employing more people there are therefore more people who are earning and can afford to buy things. (I understand employing more people also raises costs but I'm assuming for the sake of the example they still make a bigger profit)
As a result of this the companies can afford to invest and the public can afford to consume more?

Then they said that the problem arises when people become more skilled and therefore more productive and companies invest in technology so they need less people and that a balance needs to be found. The example I have is France because I study in France but they said that the minimum wage is high here and they've given less productive workers (eg. young, inexperienced workers or older people) some kind of tax break so that less productive workers are more inclined to work and help combat unemployment??

Like I said, really not sure about this but I have to write an essay on it so any kind of help or direction would be really handy especially since the professor is on a 2 week holiday at the moment..

Thanks!

[Classical Liberal]

(Original post by Aggie01)
Ok, as I said I'm really not sure about this, it's just what I got from class notes..I think it was saying that if a company's productivity is low then they'll employ more people to try and produce more. By producing more their profits rise and by employing more people there are therefore more people who are earning and can afford to buy things. (I understand employing more people also raises costs but I'm assuming for the sake of the example they still make a bigger profit)
As a result of this the companies can afford to invest and the public can afford to consume more?

Then they said that the problem arises when people become more skilled and therefore more productive and companies invest in technology so they need less people and that a balance needs to be found. The example I have is France because I study in France but they said that the minimum wage is high here and they've given less productive workers (eg. young, inexperienced workers or older people) some kind of tax break so that less productive workers are more inclined to work and help combat unemployment??

Like I said, really not sure about this but I have to write an essay on it so any kind of help or direction would be really handy especially since the professor is on a 2 week holiday at the moment..

Thanks!

Okay just to get this straight.

When you refer to 'growth' do you mean growth of GDP (the nations output) or do you mean growth of a firms revenue or profits?

And what part of the question has anything to do with employment?

[Aggie01]

I believe growth refers to GDP which is obviously linked to how the companies in that country are growing.

Employment is linked because it impacts on growth because of how many people are earning and can therefore consume or how productive the workforce is etc.

As I said, I have never done economics before so if you could give me an idea or point me in the right direction?

The question literally just says "How does productivity affect growth?" so it's probably quite open to interpretation.

[MagicNMedicine]

(Original post by Aggie01)
I believe growth refers to GDP which is obviously linked to how the companies in that country are growing.

Employment is linked because it impacts on growth because of how many people are earning and can therefore consume or how productive the workforce is etc.

As I said, I have never done economics before so if you could give me an idea or point me in the right direction?

The question literally just says "How does productivity affect growth?" so it's probably quite open to interpretation.

Increasing productivity will increase growth as you can produce more output from the same amount of working hours.

If you increase your population and have more workers you can increase output as well but then there are more people consuming the output so you might have growth of overall GDP but not growth in GDP per person.

If you increase productivity you are getting more output from the same number of workers and so you can increase GDP per person.

[Classical Liberal]

(Original post by Aggie01)
I
Employment is linked because it impacts on growth because of how many people are earning and can therefore consume or how productive the workforce is etc.

Sorry to be a douche but that is not answering the question.

Although it is true that employment is linked to growth that is not do with the question. The question is asking how increases in output (growth) are linked to changes in productivity.


Basically write what MagicMMedicine has said (although I do not think his second point is answering the question as it is not to with productivity, it is just an increase in the workforce, not an increase in productivity)

[MagicNMedicine]

(Original post by Classical Liberal)
Basically write what MagicMMedicine has said (although I do not think his second point is answering the question as it is not to with productivity, it is just an increase in the workforce, not an increase in productivity)

But that is the difference in the context of growth, between an increase in productivity and an increase in population/workforce:

- increase in workforce = growth in output but not growth in output per person

- increase in productivity = growth in output and growth in output per person

given that we are usually more concerned with growth in output per person, productivity is important to getting the kind of growth we want