The concept of the "employment threshold" plays an important role in the public discussion of unemployment. The employment threshol d is defined as that growth rate of output which is necessary to keep employment constant despite the continuous rise in labour productivity. It is related to the Okun coefficient which describes the relationship between the changes of output and unemploy ment. Many contributions to this debate give the impression that the employment threshold is more or less a structural characteristic which remains constant over time. In this paper we derive short- and long-run employment thresholds from an input demand sy stem and show empirically that they depend on factor prices. A moderate wage policy leads to a reduction of the output growth which is necessary for an increase in employment.
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number
CESifo Working Paper No. 264.
Find related papers by JEL classification: D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
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Lau, Lawrence J., 1978.
"Applications of Profit Functions,"
Histoy of Economic Thought Chapters,
in: Fuss, Melvyn & McFadden, Daniel (ed.), Production Economics: A Dual Approach to Theory and Applications, volume 1, chapter 3
McMaster University Archive for the History of Economic Thought.
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