Productivity bonus is a settlement-wide benefit that increases item crafting speed and quality for citizens. It grows by 0.1% per month for deeds with at least 30 days of upkeep in the treasury, capping at a maximum of 4%. This bonus represents the accumulated knowledge of the settlement over time.

It takes 3 1/3 years for a settlement to reach the 4% maximum. How this was determined: 4.0 max / .1 per month = 40 months, 40 months divided by 12 = 3.333 years.

If your settlement drops your productivity bonus associated with it is lost.