Labour productivity in a firm or industry increases, what can we be sure has happened?

When labour productivity in a firm or industry increases, it means that the same amount of labour is producing more output than before. This can happen due to several reasons:

1. Improved Skills and Training: The workers may have received better training or improved their skills, allowing them to work more efficiently.

2. Technological Advancements: The firm or industry may have adopted new technologies that automate certain tasks, reducing the amount of labour required.

3. Better Management: Improved management practices can lead to more efficient use of labour. This could involve better scheduling, improved workplace conditions, or more effective communication.

4. Capital Deepening: The firm or industry may have invested in more or better capital, such as machinery or equipment, which allows each worker to produce more.

5. Economies of Scale: If the firm or industry has expanded, it may be benefiting from economies of scale. This means that as the quantity of output increases, the cost per unit of output decreases, leading to increased productivity.

So, if labour productivity has increased, we can be sure that one or more of these factors have occurred.