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Labor-use efficiency and employment elasticity in Chinese manufacturing

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  • Subal Kumbhakar
  • Rui Zhang

Abstract

The paper analyzes labor-use efficiency and employment elasticity in China’s manufacturing sector by applying a stochastic input distance function to the panel data of twenty-eight Chinese manufacturing industries relative to 1999-2008. The outcome is a labor-use efficiency rate ranging from 32.9% to 100% with a mean value of 85.5%, in addition to efficiency gains over time. Employment elasticity was found to vary extensively across industries. Breaking down the employment rate of change into various components, such as technical change, technical efficiency change, and rate of change in inputs, etc., shows that the Chinese manufacturing industries experienced no "jobless growth" during the review period. Keywords: labor requirement function, technical inefficiency, stochastic frontier model

Suggested Citation

  • Subal Kumbhakar & Rui Zhang, 2013. "Labor-use efficiency and employment elasticity in Chinese manufacturing," ECONOMIA E POLITICA INDUSTRIALE, FrancoAngeli Editore, vol. 2013(1), pages 5-23.
  • Handle: RePEc:fan:polipo:v:html10.3280/poli2013-001001
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    More about this item

    Keywords

    Funzione di fabbisogno lavorativo; inefficienza tecnica; modello di frontiera stocastica;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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