SSE/EFI Working Paper Series in Economics and Finance
A Flexible Adjustment Model of Employment with Application to Zimbabwe's Manufacturing Industries
() and Mkhululi Ncube
Abstract: This paper presents a dynamic adjustment model of
employment. The model is applied to a panel of ten Zimbabwean manufacturing
industries observed over the period 1970-1993. The adjustment process is
industry and time specific. The adjustment parameter is specified in terms
of factors affecting the speed of adjustment. Industries are assumed to
adjust their labour inputs towards a desired level of labour-use. A labour
requirement function is specified in terms of observable variables and is
used to model the desired level of labour-use. In evaluating alternative
specifications, we used a flexible translog functional form where the
labour requirement is a function of wages, output and capital stock. The
empirical results show that in the long run, employment demand responds
greatest to wages, followed by capital stock changes, and least by output.
The sample mean annual speed of adjustment in employment is 33%. We further
examined labour-use efficiency of different industries defined as the ratio
of optimal to the observed level of employment. The rate of over-use of
labour ranges across industries from 6.8% to 8.1% over the period of this
Keywords: Dynamics; employment; labour-use efficiency; panel data; Zimbabwe's manufacturing; speed of adjustment; (follow links to similar papers)
JEL-Codes: C23; J23; L60; (follow links to similar papers)
20 pages, November 6, 1998, Revised August 15, 2003
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- This paper is published as:
Heshmati, Almas and Mkhululi Ncube, (2005), A Flexible Adjustment Model of Employment with Application to Zimbabwe's Manufacturing Industries, Economic Dynamics and Institutions, CEDAM, ISBN 88-13-25839-9.
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