Question

How do gains in labor productivity lead to gains in

GDP per capita?

Short answer

This happened because of the work done by the workforce.

Step-by-step solution

Step 1. Definition

Worker’s productivity also known as workforce productivity is defined as an evaluation or appraisal of the efficiency of a worker or a group of workers.

Gross domestic product (GDP) is referred to as the economic value of all finished goods and services manufactured within a nation during a fixed period of time.

Step 2. Explanation

Gains in worker productivity mean that the workers are producing more as compared to the past, so the income of the workers will increase for sure as their productivity increases. Now the workers will have more disposable income which they will spend on their consumption and in turn, the demand rises for products. This will lead to the rise in per capita GDP automatically.