Employment, capital and productivity dynamics: evidence from the manufacturing sector in Uruguay

Carlos Casacuberta, Gabriela Fachola and Nestor Gandelman
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Carlos Casacuberta: Universidad de la República. Facultad de Ciencias Sociales. Departamento de Economía
Gabriela Fachola: Universidad de la República. Facultad de Ciencias Sociales. Departamento de Economía

No 16, Documentos de Investigación from Universidad ORT Uruguay. Facultad de Administración y Ciencias Sociales

Abstract: This paper studies the employment, capital and productiviy dynamics in the uruguayan manufacturing sector between 1982 and 1995. over this period in Uruguay there were significant changes in trade policy and in the institutional setting of employment negotiations. Using a sample of establishments, creation, desturction, net creation and reallocation rates for employment and capital were computed, along with estimations fo average employment, capital and total factor productivity. Creation and destruction rates for labor and capital were found to be relatively high and pervasive over time, industry sectors, size and age. Exits and entries explain a sizeable part of job and capital destruction rates. Larger firms although are not those that create most jobs, are the ones with the higher net creation rates. Decomposing excess reallocation rates for emplyment and capital we found that most of the adjustment is due to movements "within" rather than "between" sectors. Thus, the high reallocation rates are probably linked to establishment level heterogeneity rather than aggregate shocks. The uruguayan manufacturing in order to face the trade barrier reductions process performed a technological conversion that implied a substitution of labor for more capital intensive technologies. Such technologies brought about a progressive and systematic increase in labor and total factor productivity.

Keywords: employment and capital reallocation; TFP; Latin-America; Uruguay (search for similar items in EconPapers)
Pages: 39 pages
Date: 2004-09
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Journal Article: EMPLOYMENT, CAPITAL, AND PRODUCTIVITY DYNAMICS: EVIDENCE FROM THE MANUFACTURING SECTOR IN URUGUAY (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:avs:wpaper:16

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