1. SHORT-TERM EMPLOYMENT FUNCTIONS IN AUSTRALIAN MANUFACTURING.
- Author
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Smyth, D. J. and Ireland, N. J.
- Subjects
EMPLOYMENT ,MANUFACTURING industries ,ECONOMIC demand ,LABOR ,POPULATION - Abstract
Recent and forthcoming studies of the relationship between output and employment have used a demand-determined model in which desired employment is a function of output and with actual employment determined by linking such a relationship with a dynamic adjustment mechanism. The present article is a further study of such a model but is oriented to a country of fast industrial and population growth, Australia. The results obtained are interpreted in the light of the new specification of the relationship advanced by economists N.J. Ireland and D.J. Smyth. The employment functions that authors have fitted to Australian manufacturing appear to produce reasonably sensible results and some interesting comparisons with previous studies. But authors must stress the difficulties and limitations of this form of analysis. First, there is the problem of identifying a demand relationship and in this study there is no way of ascertaining if authors achieved this. Secondly, there are statistical problems, arising principally through multicollinearity and the use of a distributed lag model. Finally, there are problems of interpretation, for instance, the distinction between returns to scale and returns to labor and between shifts in capital and shifts in technology.
- Published
- 1967
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