Technological Progress

We know that the production function is
Y = F(K, L)
To incorporate the technological progress, we include E in the production function which denotes the labor efficiency. L*E denotes the no. of effective labor. Thus, the production function shows that the output Y depends on capital K and the effective labor L*E. Hence, from now, capital per effective worker will be considered in place of capital per worker.
Y = F(K, L × E)
As the technology improves, the efficiency of labor increases and the no. of effective labor increases. For e.g., If the efficiency of labor doubles, then the output which could be earlier produced by two labors, can now be produced by one labor. Hence, the no. of effective labor doubles.