From investopedia:

Supply rises with productivity, dropping real prices and increasing real wages; it lifts people out of poverty and allows them to focus on efforts beyond mere survival.

I thought I was naive so I asked google why productivity was always good in economics and this is "google's answer." Does economics really assume that whatever work a human does, doing it less and something else more is always better for them?

  • 3
    $\begingroup$ Why using "infinitely" in your title? $\endgroup$
    – Bertrand
    Aug 24, 2019 at 14:04
  • $\begingroup$ Because there's no qualifier in the original text? $\endgroup$
    – Audiomatt
    Aug 25, 2019 at 0:39
  • 2
    $\begingroup$ There is no adjective in the original text, because productivity is not "infinitely" good. Your question would be less ambiguous if "infinitely" was removed... Your current formulation generates reluctance to answer. $\endgroup$
    – Bertrand
    Aug 25, 2019 at 10:07

1 Answer 1


Productivity gains either allow to produce more with constant inputs, or to produce the same amount as before with fewer inputs. It is to individuals and firms to decide what to do do with productivity gains. In a market economy, the price and wage adjustments induced by productivity changes help individuals to decide whether to work less or more, to invest and hire more employees, etc.

Usually productivity gains do not fall from heaven, firms and individuals have to pay for it (R&D, organizational change, etc) so it is not necessarily good, it is however welfare improving if the price paid to achieve productivity gains does not increase the benefits (private or public). How costs and benefits from productivity changes are shared in order to promote both equity and further productivity gains is a challenging societal and political issue.

Contrary to the claim of your citation, productivity gains do not systematically increase wages, it depends on the technology and the structure of the commodity and labour market.


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