What are diminishing returns to labour, and what consequences do they have for our understanding of...

What are diminishing returns to labour, and what consequences do they have for our understanding of how societies can achieve sustained economic growth over time?

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Diminishing returns to labor- As more and more employees are employed, contribution to the total output by an additional unit of labor / employee decreases. However total output produced increases, but these are increased at a decreasing rate. This is because each additional labor contribution or productivity falls as compared to the previous labor.

Sustainable economic growth means that rate of growth which has to be maintained without creating other economic problems especially for the future generations. As we have Diminishing marginal productivity of labor, societies have to rely majorly on building their technological capacities and focussing on their technological advancements. By technological advancements the loss in productivity ( by an additional unit of labor) is fulfilled.

There is a trade off between rapid economic growth today, and growth in the future. Rapid growth today may deplete resources and create environmental problems for future generations, including the depletion of oil and fish stocks, and global warming. So the resources should be managed and utilized sustainably. The main focus should not be on rapid growth but on substainable growth.

Rahul Sunny answered 8 months ago

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