This posting is triggered by Ape’s posting. Increasing minimum wages (MW) is considered as the main factor of slowing formal employment growth. But is it true? I’m a bit skeptical to this argument. I do not undermine the impact of MW on formal sector employment, but just question its magnitude. Based on my research on textile industry (labor-intensive industry), I found how technical change also contributes to decelerating employment growth in the formal sector. Here is the excerpt
“…fiber industry and spinning industry are characterized as relatively capital-intensive industry. On the other hand, the apparel industry and footwear industry are classified as labor-intensive industry. This category is reflected by the figure X. The capital intensity of textiles industry (left-axis) is far above the capital intensity of apparel and footwear industry (right-axis). However, several trends are worth pointing. First the 1998 economic crisis has brought a significant change in the factor intensity. In three sub sectors, the capital intensity increased dramatically in the crisis period. The main driver was because the crisis led to a surging capital price and massive-scale of job dismissal (i.e. compositional change).
“…fiber industry and spinning industry are characterized as relatively capital-intensive industry. On the other hand, the apparel industry and footwear industry are classified as labor-intensive industry. This category is reflected by the figure X. The capital intensity of textiles industry (left-axis) is far above the capital intensity of apparel and footwear industry (right-axis). However, several trends are worth pointing. First the 1998 economic crisis has brought a significant change in the factor intensity. In three sub sectors, the capital intensity increased dramatically in the crisis period. The main driver was because the crisis led to a surging capital price and massive-scale of job dismissal (i.e. compositional change).
Figure x. Capital Intensity in Textile, Apparel and Footwear industry
calculated from statistical industry
green: textile; red:apparel and black: footwear
calculated from statistical industrygreen: textile; red:apparel and black: footwear
..Nevertheless the capital intensity of textile industry returned back to the pre-crisis level with the economic recovery. This trend, surprisingly, did not occurred in apparel and footwear industry. The capital intensity in apparel and footwear industry continued to grow. It is obvious that apparel and footwear industry would not change dramatically into capital-intensive industry. Yet the increase brings a notable consequence to job creation. Moreover, the increase in the capital intensity of apparel and footwear industry has decelerated employment creation in these sectors. In sum, a rising capital intensity occurring in 1995 has been followed by slowing employment growth in the apparel and footwear industry (discussed in the Chapter on Labour). This suggests that there has been a strong substitute from labor to capital in the TCF industry…”
In other words, slowing employment growth in textile industry already took place before the crisis and, surely, before the rapid increase in MW. I’m thinking that perhaps other labour regulations affecting much employment growth instead of MW.
In other words, slowing employment growth in textile industry already took place before the crisis and, surely, before the rapid increase in MW. I’m thinking that perhaps other labour regulations affecting much employment growth instead of MW.
4 comments:
It is possible that there is no conflict between yours and AP view. Both increase in productivity and increase in wage reduced L demand.
Let consider CES Labor demand:
L=[(1-a)^s]/[A^(1-s)]*(p/w)^s*Q
in growth term
Lg=-(1-s)*Ag+s*pg-s*wg+Qg
suppose before the crisis wg~0, then negative Lg is explained by Ag, more than by wg
suppose that during and after the crisis wg>>0, and Ag is smaller then the negative Lg is explained more by wg rather then Ag.
It is an empirical question. But my intuition sides with AP's view. No new capital investment in textile after the crisis, then Ag~0, while wg increased considerably.
Hi !.
You re, I guess , perhaps curious to know how one can make real money .
There is no need to invest much at first. You may begin to receive yields with as small sum of money as 20-100 dollars.
AimTrust is what you haven`t ever dreamt of such a chance to become rich
The firm represents an offshore structure with advanced asset management technologies in production and delivery of pipes for oil and gas.
It is based in Panama with structures everywhere: In USA, Canada, Cyprus.
Do you want to become really rich in short time?
That`s your chance That`s what you desire!
I feel good, I started to take up real money with the help of this company,
and I invite you to do the same. It`s all about how to select a correct companion utilizes your money in a right way - that`s AimTrust!.
I earn US$2,000 per day, and what I started with was a funny sum of 500 bucks!
It`s easy to get involved , just click this link http://foxumecuqa.100freemb.com/lijuhymi.html
and lucky you`re! Let`s take our chance together to become rich
Hello !.
You re, I guess , probably curious to know how one can make real money .
There is no initial capital needed You may start to get income with as small sum of money as 20-100 dollars.
AimTrust is what you need
The company represents an offshore structure with advanced asset management technologies in production and delivery of pipes for oil and gas.
Its head office is in Panama with offices around the world.
Do you want to become a happy investor?
That`s your choice That`s what you wish in the long run!
I feel good, I began to take up income with the help of this company,
and I invite you to do the same. It`s all about how to select a proper companion utilizes your money in a right way - that`s AimTrust!.
I make 2G daily, and my first deposit was 1 grand only!
It`s easy to start , just click this link http://ozyrogek.lookseekpages.com/ecunyg.html
and lucky you`re! Let`s take our chance together to get rid of nastiness of the life
Good day, sun shines!
There have been times of hardship when I felt unhappy missing knowledge about opportunities of getting high yields on investments. I was a dump and downright stupid person.
I have never imagined that there weren't any need in large starting capital.
Now, I feel good, I started to get real income.
It gets down to choose a correct partner who utilizes your money in a right way - that is incorporate it in real deals, and shares the profit with me.
You may ask, if there are such firms? I'm obliged to answer the truth, YES, there are. Please get to know about one of them:
http://theinvestblog.com [url=http://theinvestblog.com]Online Investment Blog[/url]
Post a Comment