Microeconomic Flexibility in India and Pakistan: Employment Adjustment at the Firm Level
Theresa Chaudhry ()
Lahore Journal of Economics, 2009, vol. 14, issue Special Edition, 17-27
In this paper, we look at the pace at which firms adjust their employment levels as a measure of “microeconomic flexibility.” Flexibility aids in creative destruction processes,where less efficient establishments recede and dynamic firms can rapidly expand. Following the techniques used by Caballero, Engel, and Micco (2004), we use firm-level data from India and Pakistan to estimate the proportion of the gap closed in a year between desired and actual employment. The results for the proportion of the gap closed for India were 0.46 in 2001 and 0.45 in 2000. For Pakistan, we estimated the proportion of the gap closed as0.2 in 2001 and 0.53 in 2000. The results for 2001 were much lower than expected (and lower than previous estimates for both countries), possibly due to the events of 9/11. Pakistan compared favorably to India in various key sectors, including chemicals, food processing, and garments. Exporters did not seem to have a quicker speed of adjustment.
Keywords: Costs; efficiency; flexibility; inputs; labor. (search for similar items in EconPapers)
JEL-codes: E2 J2 J6 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:lje:journl:v:14:y:2009:i:sp:p:17-27
Access Statistics for this article
More articles in Lahore Journal of Economics from Department of Economics, The Lahore School of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Shahid Salahuddin ().