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tio to reflect changes in a number of factors (such as technology, shifts in labor force composition, capacity utilization changes, research and development, work force skills and effort, and management quality) which affect the production process.2

Output may also be measured in terms of the quantity of products and services produced. In one sense, this approach is superior to the use of value as stated in constant prices. The use of a valuebased measure incorporates monetary factors and product sale prices into the productivity equation. Such factors tend to distort the productivity of workers. On the other hand, in a technologically advanced economy, a productivity measure based only on labor inputs tends to distort productivity measures. 3

In the contemporary time period, American productivity is often compared with that of Japan. Recent trends in Japanese and American productivity are presented in Table 1, which may be found below on this page.

Table 1

Output per Hour Index: Japan and the United States

Selected Years from 19601989 (1977=100)

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Year Japan United States

1960 23.2 62.2

1970 64.8 80.8

1973 83.1 93.4

1976 94.3 97.1

1977 100.0 100.0

1979 114.8 101.4

1980 122.7 101.4

1981 127.2 103.6

1982 135.0 105.9

1983 142.3 ...