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Estimates of labour demand elasticities and elasticities of substitution using firm-level manufacturing data

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  • Alberto Behar

Abstract

Using firm-level manufacturing data supplemented with wages from household survey data, this paper estimates translog cost functions to calculate labour demand elasticities and Allen Elasticities of Substitution between capital and four occupation types. It finds that own-price labour demand elasticities range from -0.56 to -0.8 , that capital and all occupation types are substitutes and that most occupation types are themselves complements.

Suggested Citation

  • Alberto Behar, 2004. "Estimates of labour demand elasticities and elasticities of substitution using firm-level manufacturing data," SALDRU/CSSR Working Papers 098, Southern Africa Labour and Development Research Unit, University of Cape Town.
  • Handle: RePEc:ldr:cssrwp:098
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    References listed on IDEAS

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    1. Charlotte Toit & Reneéa Koekemoer, 2003. "A Labour Model For South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 71(1), pages 49-76, March.
    2. Binswanger, Hans P, 1974. "The Measurement of Technical Change Biases with Many Factors of Production," American Economic Review, American Economic Association, vol. 64(6), pages 964-976, December.
    3. Haroon Bhorat & Paul Lundall, 2004. "Employment, Wages And Skills Development: Firm-Specific Effects - Evidence From A Firm Survey In South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 72(5), pages 1023-1056, December.
    4. Teal, Francis, 2000. "Real wages and the demand for skilled and unskilled male labour in Ghana's manufacturing sector: 1991-1995," Journal of Development Economics, Elsevier, vol. 61(2), pages 447-461, April.
    5. Oi, Walter Y. & Idson, Todd L., 1999. "Firm size and wages," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 33, pages 2165-2214 Elsevier.
    6. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
    7. Chung, Jae Wan, 1987. "On the Estimation of Factor Substitution in the Translog Model," The Review of Economics and Statistics, MIT Press, vol. 69(3), pages 409-417, August.
    8. Nicoli Nattrass, 2004. "Unemployment and aids: the social-democratic challenge for South Africa," Development Southern Africa, Taylor & Francis Journals, vol. 21(1), pages 87-108.
    9. Anderson, Richard G & Thursby, Jerry G, 1986. "Confidence Intervals for Elasticity Estimators in Translog Models," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 647-656, November.
    10. Mark Doms & Timothy Dunne & Kenneth R. Troske, 1997. "Workers, Wages, and Technology," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 253-290.
    11. Lawrence Edwards, 2004. "A firm level analysis of trade, technology and employment in South Africa," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(1), pages 45-61.
    12. Haroon Bhorat & Paul Lundall, 2002. "Employment, Wages and Skills Development: Firm Specific Effects - Evidence from Two Firm Surveys in South Africa," Working Papers 02068, University of Cape Town, Development Policy Research Unit.
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    Cited by:

    1. Muriel Hernández, Beatriz & Machicado Salas , Carlos Gustavo, 2014. "Empleo y Regulación Laboral: Análisis Empírico de Las Firmas Manufactureras Bolivianas, 1988-2007," Revista Latinoamericana de Desarrollo Economico, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana, issue 21, pages 9-60, Mayo.
    2. Sparrow, G.N. & Ortmann, Gerald F. & Lyne, Michael C. & Darroch, Mark A.G., 2008. "Determinants of the demand for regular farm labour in South Africa, 1960-2002," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 47(1), March.
    3. Vicente Ruiz, 2016. "Groundwater Overdraft, Electricity, and Wrong Incentives: Evidence from Mexico," Working Papers 2016.05, FAERE - French Association of Environmental and Resource Economists.
    4. Chaaban, Jad & Cunningham, Wendy, 2011. "Measuring the economic gain of investing in girls : the girl effect dividend," Policy Research Working Paper Series 5753, The World Bank.
    5. Frederick C.v.N. Fourie, 2011. "The South African unemployment debate: three worlds, three discourses?," SALDRU Working Papers 63, Southern Africa Labour and Development Research Unit, University of Cape Town.
    6. Alberto Behar, 2005. "Does training benefit those who do not get any? Elasticities of complementarity and factor price in South Africa," Economics Series Working Papers 244, University of Oxford, Department of Economics.

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