Labor Productivity

Question

Suppose labor productivity is $100 per worker in 2010. Calculate the value of labor productivity in 2030 (20 years later): a. productivity continues to grow by 3.3 percent per year.   U.S labor productivity in 2030 would be $  per worker.

Answer 1

One way is to use the base of the natural logarithm, and this will be compounded continuously; therefore, 

 

100( e^{( 0.033 times 20 years)}) =$193.48

 

So the productivity per worker would be $193.48 in 2030; however, this problem is not taking into account inflation( the devaluing of the dollar).  Productivity should not be defined in dollars as this problem does. It should be defined as "the effectiveness of productive effort, especially in industry, as measured in terms of the rate of output per unit of input."  If this is a problem from a textbook, then the textbook needs to be edited to be congruent with the true definition of productivity.