when a nation has a shortage of human capital it must either focus on increasing human capital through immigration and offering incentives to raise birth rates or on increasing capital investments and developing new technological advancements 
factors that affect labor productivitylabor productivity can be hard to quantify accurately while it s simple enough to draw a connection between the number of goods produced by factory labor in one hour of work for example it s harder to place a value on service how much is an hour of a waitress s time worth what about an hour of an accountant what about a nurse statisticians can estimate the dollar value of labor in these professions but without tangible goods to appraise an exact valuation is impossible an increase in a country s labor productivity will in turn create growth in the real gdp per person since productivity indicates the number of goods an average worker can produce in one hour of labor it may give clues to a country s standard of living for example during the industrial revolution in europe and the united states rapid industrial technological advances allowed workers to make great gains in their hourly productivity rates this increased production led to higher standards of living in europe and the united states in general this happens because when laborers can produce more goods and services their wages increase too 