Considering the graphic below from the Australian Productivity Commission, answer the following questions. Figure 6 Productivity explains the majority of GDP per capita growth since Federation GDP per capita (2010 USD) per weeka in 1901 and 2016 (quoted in 2010 USD), and the dollar contributions due to price effectsb, labour utilisationº, capital deepeningd and MFP 1000 900 800 700 600 +503 500 861 400 A 300 +259 200 +39 -50 100 111 GDP Price effects Labour utilisation Capital Multifactor GDP per capita (1901) deepening Productivity per capita (2016) a GDP per capita is quoted in weekly terms for tractability. b Price effects are the portion of growth in real GDP (when converted using current purchasing power parity (PPP)) that is not explained by growth in real GDP (when converted using constant PPP). These include the effects of the terms of trade. č The portion of GDP per capita growth not accounted for by labour productivity growth. d The portion of labour productivity growth not accounted for by MFP growth. Sources: Commission estimates based on Bergeaud et al. (2017) and Bolt et al. (2018). (i) What were the two main components of the gain in labour productivity from 1901 to 2016? What was the proportional contribution of each? Show your calculations. GDP per capita (2010 USD)
Considering the graphic below from the Australian Productivity Commission, answer the following questions. Figure 6 Productivity explains the majority of GDP per capita growth since Federation GDP per capita (2010 USD) per weeka in 1901 and 2016 (quoted in 2010 USD), and the dollar contributions due to price effectsb, labour utilisationº, capital deepeningd and MFP 1000 900 800 700 600 +503 500 861 400 A 300 +259 200 +39 -50 100 111 GDP Price effects Labour utilisation Capital Multifactor GDP per capita (1901) deepening Productivity per capita (2016) a GDP per capita is quoted in weekly terms for tractability. b Price effects are the portion of growth in real GDP (when converted using current purchasing power parity (PPP)) that is not explained by growth in real GDP (when converted using constant PPP). These include the effects of the terms of trade. č The portion of GDP per capita growth not accounted for by labour productivity growth. d The portion of labour productivity growth not accounted for by MFP growth. Sources: Commission estimates based on Bergeaud et al. (2017) and Bolt et al. (2018). (i) What were the two main components of the gain in labour productivity from 1901 to 2016? What was the proportional contribution of each? Show your calculations. GDP per capita (2010 USD)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
(i) What were the main two components of the gain in labor productivity from 1901 to 2016? What was the proportional contribution of each?
(ii) How does ‘capital deepening’ occur?
(iii) What causes ‘multifactor productivity’ to increase?
Transcribed Image Text:Considering the graphic below from the Australian Productivity Commission, answer the
following questions.
Figure 6
Productivity explains the majority of GDP per capita growth
since Federation
GDP per capita (2010 USD) per weeka in 1901 and 2016 (quoted in 2010
USD), and the dollar contributions due to price effectsb, labour utilisationc,
capital deepeningd and MFP
1000
900
800
700
600
+503
500
861
400
300
+259
200
+39
-50
100
111
GDP
Price effects
Labour
utilisation
Capital
deepening Productivity
Multifactor
GDP
per capita
(1901)
per capita
(2016)
a GDP per capita is quoted in weekly terms for tractability. b Price effects are the portion of growth in real
GDP (when converted using current purchasing power parity (PPP)) that is not explained by growth in real
GDP (when converted using constant PPP). These include the effects of the terms of trade. Č The portion
of GDP per capita growth not accounted for by labour productivity growth. d The portion of labour productivity
growth not accounted for by MFP growth.
Sources: Commission estimates based on Bergeaud et al. (2017) and Bolt et al. (2018).
(i)
What were the two main components of the gain in labour productivity from 1901 to
2016? What was the proportional contribution of each? Show your calculations.
GDP per capita (2010 USD)
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