How is GDP per capital calculated differently from labor productivity?

Gross Domestic Product (GDP) per capita is a measure of the average income per person in an economy. It is calculated by dividing the total GDP of a country by its population. The GDP per capita provides an estimate of the standard of living in a country. It is commonly used to compare the economic well-being of citizens in different countries.

The formula for calculating GDP per capita is: GDP per capita = \( \frac {GDP} {population} \) Where: - GDP is the Gross Domestic Product - population is the total number of people in the country

Labor productivity is a measure of economic output produced per worker, also known as output per hour or output per labor input. It indicates how efficiently labor is used to produce goods and services in an economy. Higher labor productivity typically implies a more efficient use of labor resources, and it is an essential determinant of economic growth.

The formula for calculating labor productivity is: Labor productivity = \( \frac {output} {labor\thinspace input} \) Where: - output is the total value of goods and services produced in an economy (usually represented by GDP) - labor input is the total number of hours (or workers, depending on the context) employed in the economy

Based on the definitions and calculations provided, we can identify the following differences between GDP per capita and labor productivity: 1. Purpose: GDP per capita measures average income per person and is an indicator of the standard of living, while labor productivity measures output produced per worker. GDP per capita is often used for comparing the well-being of citizens in different countries, while labor productivity is crucial for understanding how efficiently a country's workforce is utilized. 2. Calculation: GDP per capita is calculated by dividing the total GDP by the population, while labor productivity is computed by dividing the output by the labor input (number of hours or workers). 3. Relationship with population: GDP per capita is affected by changes in population, while labor productivity is not directly influenced by population growth. For example, if a country's population increases, its GDP per capita will decrease if GDP does not increase at the same rate. In contrast, labor productivity will remain unchanged in this scenario if the output and labor input increase proportionately.