Industrialization and Labor Demand
The effects of industrialization on labor demand in the manufacturing sector of a developing economy are linked to the industrial organization of that sector. Using a dominant firm-competitive fringe framework, one can incorporate the existence of both constant and increasing returns technologies in production and allow for the coexistence of both types of firms in the production of a variety of goods. Industrialization, defined as the expansion of dominant firms into the production of an increasing number of manufactured goods, can be either labor-saving or labor-using; neither outcome can be entirely ruled out. Labor creation is most likely to occur the more sensitive dominant firm output is to changes in cost and the less elastic is the fringe supply curve.
Volume (Year): 19 (1993)
Issue (Month): 2 (Spring)
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