Capital Deepening
Capital deepening is an increase in capital services per labor hour, a potential contributor to labor-productivity growth.
Economics terms for capital productivity, capital intensity, marginal product of capital, and marginal efficiency of investment.
Capital productivity asks how effectively productive assets support output. The answer depends on whether the analyst measures asset stocks, the flow of Capital Services, labor hours, or output, and whether the data are adjusted for prices and asset quality.
Capital Intensity is a level or ratio. Capital Deepening is an increase in capital services per labor hour. Capital Productivity reverses the ratio by asking how much output is generated per unit of capital input.
For incremental analysis, Marginal Product of Capital measures additional output from additional capital, holding other inputs constant. Marginal Efficiency of Capital describes the expected discount rate implied by a new capital asset’s prospective yields and supply price. User Cost of Capital estimates the period cost of employing the asset.
No single measure proves that investment is productive. Compare consistent sectors and periods, distinguish nominal asset values from service-volume measures, and consider utilization, obsolescence, labor composition, project risk, and output quality.
Choose a subsection first. Deeper term pages live inside each subsection, which keeps large topic hubs readable.
Capital deepening is an increase in capital services per labor hour, a potential contributor to labor-productivity growth.
Capital intensity compares capital input with labor, output, or revenue to show how heavily production depends on productive assets.
Capital productivity measures output per unit of capital services, showing how effectively productive assets support current production.
Capital services measure the productive flow supplied by equipment, structures, inventories, land, and intellectual-property assets during a period.
Marginal efficiency of capital is the expected discount rate that equates a new capital asset's prospective yields with its supply price.
Marginal product of capital is the additional output associated with one more unit of productive capital, holding other inputs constant.
User cost of capital is the estimated period cost of employing a capital asset, including financing opportunity cost, depreciation, and expected price change.