Innovation and weak labour disposability: some theoretical and empirical evidence

Osman Suliman

Applied Economics, 1997, vol. 29, issue 12, 1687-1693

Abstract: This paper envisages theoretically and empirically the weak labour disposability and the ability of labour to innovate in a poor-capital, surplus-labour economy. Therefore, a production function where the marginal product can become zero or even negative has been derived and estimated using data from Suden over the period 1968-88, with quarterly interpolation. Thus, unlike neoclassical specifications of endogenous growth theory, labour withdrawal may have minimal effect on output. The results indicate the presence of weak disposability of labour. The existence of a discernibly low capital-saving technical relationship between labour and capital has been verified using cointegration techniques.

Date: 1997
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DOI: 10.1080/00036849700000044

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