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Trends in employment and the employment elasticity in manufacturing, 1971--92: an international comparison

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  • Dipak Mazumdar

Abstract

Employment growth in manufacturing is limited by output growth in this sector, but the elasticity of employment with respect to output has varied widely in different regions and economies. This paper focuses attention on the idea that a major determinant of employment elasticity is the way the fruits of output growth are divided between employment growth and wage growth. But before we are able to determine the quantitative dimension of the trade-off, we have to allow for two other factors which affect the size of the cake available to labour in real terms. These are: (i) the elasticity of the wage bill with respect to output, which determines the trend in the share of labour; and (ii) the price effect, depending partly on the rate of inflation and partly on the movements of producer prices relative to consumer prices. A simple decomposition procedure is outlined in the paper which allows us to quantify the relative importance of these factors, and hence give a clearer idea of the labour market outcome leaning to one or other of the two interests, employment growth and real wage growth. The empirical analysis for different regions of the world is carried out on time series data for the manufacturing sector collected by UNIDO from the national surveys of member countries for the decades of the 1970s and the 1980s. Copyright 2003, Oxford University Press.

Suggested Citation

  • Dipak Mazumdar, 2003. "Trends in employment and the employment elasticity in manufacturing, 1971--92: an international comparison," Cambridge Journal of Economics, Oxford University Press, vol. 27(4), pages 563-582, July.
  • Handle: RePEc:oup:cambje:v:27:y:2003:i:4:p:563-582
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    Cited by:

    1. Emiliano COLANTONIO & Gianluigi NICO, 2014. "CAN OKUN’s LAW EXPLAIN DECENT WORK DEFICIT FOR YOUNG PEOPLE IN EUROPE? A FOCUS ON THE ROMANIAN ECONOMY," Romanian Journal of Economics, Institute of National Economy, vol. 38(1(47)), pages 5-35, June.
    2. repec:ilo:ilowps:458325 is not listed on IDEAS
    3. Liwen, Chen & Zeng, Xiangquan & Yumei, Yang, 2011. "Rural Labor Absorption Efficiency in Urban Areas under Different Urbanization Patterns and Industrial Structures: The Case of China," IZA Discussion Papers 6189, Institute for the Study of Labor (IZA).
    4. PERUGINI, Cristiano, 2009. "Employment Intensity Of Growth In Italy. A Note Using Regional Data," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 9(1).
    5. repec:ilo:ilowps:461762 is not listed on IDEAS
    6. Majid, Nomaan., 2011. "On the income dimension of employment in developing countries," ILO Working Papers 994617623402676, International Labour Organization.

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