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Would Cheaper Capital Replace Labour?


  • Alberto Behar


Left-leaning members of the ruling alliance should be careful what they wish for. By estimating elasticities of substitution and factor demand between capital and four labour types, we find microeconomic evidence that cheaper capital would reduce demand for labour. While capital and all occupations are substitutes, many but not all occupations are themselves complements. These results allow for endogenous changes in output and apply to the vast majority of firms in our sample. Copyright (c) 2010 The Author. Journal compilation (c) 2010 Economic Society of South Africa.

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  • Alberto Behar, 2010. "Would Cheaper Capital Replace Labour?," South African Journal of Economics, Economic Society of South Africa, vol. 78(2), pages 131-151, June.
  • Handle: RePEc:bla:sajeco:v:78:y:2010:i:2:p:131-151

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    References listed on IDEAS

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    Cited by:

    1. Rankin Neil & Burger Rulof & Kreuser Friedrich, 2015. "The elasticity of substitution and labour-displacing technical change in post-apartheid South Africa," WIDER Working Paper Series 101, World Institute for Development Economic Research (UNU-WIDER).
    2. Andrew Kerr & Martin Wittenberg & Jairo Arrow, 2014. "Job Creation and Destruction in South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 82(1), pages 1-18, March.
    3. Dieter von Fintel, 2017. "Institutional wage-setting, labour demand and labour supply: Causal estimates from a South African pseudo-panel," Development Southern Africa, Taylor & Francis Journals, vol. 34(1), pages 1-16, January.
    4. repec:ldr:wpaper:92 is not listed on IDEAS
    5. Traoré, Jean Abel & Ouedraogo, Idrissa Mohamed, 2015. "Public policies promoting the informal economy: effects on incomes, employment and growth in Burkina Faso," MPRA Paper 74760, University Library of Munich, Germany.
    6. Alberto Behar, 2015. "Comparing the Employment-Output Elasticities of Expatriates and Nationals in the Gulf Cooperation Council," IMF Working Papers 15/191, International Monetary Fund.
    7. Hanan Nazier, 2017. "Estimating Labor Demand Elasticities and Elasticities of Substitution in Egyptian Manufacturing Sector: A Firm Level Static Analysis," Working Papers 1158, Economic Research Forum, revised 11 2017.
    8. Rankin, Neil & Roberts, Gareth & Schoer, Volker, 2014. "The success of learnerships? Lessons from South Africa.s training and education programme," WIDER Working Paper Series 068, World Institute for Development Economic Research (UNU-WIDER).

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