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Capital Constraints and Employment

Author

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  • Jerome Fahrer

    (Reserve Bank of Australia)

  • John Simon

    (Reserve Bank of Australia)

Abstract

This paper considers whether capital is a significant constraint on employment in Australia. We calculate the level of capital-constrained employment for ten sectors of the Australian economy. The calculations suggest that the manufacturing; mining; transport, storage and communication and recreation, personal and other services sectors have sufficient capital installed to increase employment. In another sector, wholesale and retail trade, the potential for increases in employment through increased capital utilisation may be constrained by surplus labour (as of June 1993). While some sectors, e.g. community services, are capital constrained at the moment, we find that the investment requirements to increase employment in these sectors are not onerous. We also project investment requirements in each of the sectors for employment growth over the next five years. These projections suggest that a jump in investment followed by relatively modest growth is required to sustain growth in employment.

Suggested Citation

  • Jerome Fahrer & John Simon, 1994. "Capital Constraints and Employment," RBA Research Discussion Papers rdp9403, Reserve Bank of Australia.
    • Handle: RePEc:rba:rbardp:rdp9403
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    File URL: https://www.rba.gov.au/publications/rdp/1994/pdf/rdp9403.pdf
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    References listed on IDEAS

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    1. Taylor, Jim, 1979. "The Theory and Measurement of Labour Hoarding: A Comment," Scottish Journal of Political Economy, Scottish Economic Society, vol. 26(2), pages 191-201, June.
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    Cited by:

    1. Giulio, NICOLETTI & Olivier, PIERRARD, 2006. "Capital Market Frictions and the Business Cycle," Discussion Papers (ECON - Département des Sciences Economiques) 2006053, Université catholique de Louvain, Département des Sciences Economiques.
    2. Jacqueline Dwyer & Christine Groeger, 1994. "Resource Flows to the Traded Goods Sector," RBA Research Discussion Papers rdp9401, Reserve Bank of Australia.
    3. Shebeb, Bassim & Longmire, James L., 1997. "Capacity Utilisation and Productivity Change in the Australian Metals Mining Industry," 1997 Conference (41st), January 22-24, 1997, Gold Coast, Australia 136529, Australian Agricultural and Resource Economics Society.

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