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Would Cheaper Capital Replace Labour?

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  • Alberto Behar

Abstract

Left‐leaning members of the ruling alliance should be careful what they wish for. By estimating elasticities of substitution and factor demand between capital and four labour types, we find microeconomic evidence that cheaper capital would reduce demand for labour. While capital and all occupations are substitutes, many but not all occupations are themselves complements. These results allow for endogenous changes in output and apply to the vast majority of firms in our sample.

Suggested Citation

  • Alberto Behar, 2010. "Would Cheaper Capital Replace Labour?," South African Journal of Economics, Economic Society of South Africa, vol. 78(2), pages 131-151, June.
    • Handle: RePEc:bla:sajeco:v:78:y:2010:i:2:p:131-151
    DOI: 10.1111/j.1813-6982.2010.01240.x
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    Cited by:

    1. Carl Friedrich Kreuser & Carol Newman, 2018. "Total Factor Productivity in South African Manufacturing Firms," South African Journal of Economics, Economic Society of South Africa, vol. 86(S1), pages 40-78, January.
    2. Neil Rankin & Rulof Burger & Friedrich Kreuser, 2015. "The elasticity of substitution and labour-displacing technical change in post-apartheid South Africa," WIDER Working Paper Series 101, World Institute for Development Economic Research (UNU-WIDER).
    3. Andrew Kerr & Martin Wittenberg & Jairo Arrow, 2014. "Job Creation and Destruction in South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 82(1), pages 1-18, March.
    4. Traoré, Jean Abel & Ouedraogo, Idrissa Mohamed, 2015. "Public policies promoting the informal economy: effects on incomes, employment and growth in Burkina Faso," MPRA Paper 74760, University Library of Munich, Germany.
    5. Friedrich Kreuser & Rulof Burger & Neil Rankin, 2015. "The elasticity of substitution and labour-displacing technical change in post-apartheid South Africa," WIDER Working Paper Series wp-2015-101, World Institute for Development Economic Research (UNU-WIDER).
    6. Dieter von Fintel, 2017. "Institutional wage-setting, labour demand and labour supply: Causal estimates from a South African pseudo-panel," Development Southern Africa, Taylor & Francis Journals, vol. 34(1), pages 1-16, January.
    7. Hanan Nazier, 2019. "Estimating Labor Demand Elasticities and Elasticities of Substitution in Egyptian Manufacturing Sector: A Firm-Level Static Analysis," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 62(4), pages 549-575, December.
    8. Carl Friedrich Kreuser & Carol Newman, 2018. "Total Factor Productivity in South African Manufacturing Firms," South African Journal of Economics, Economic Society of South Africa, vol. 86(S1), pages 40-78, January.
    9. Neil Rankin & Gareth Roberts & Volker Schöer, 2014. "The Success of Learnerships?: Lessons from South Africa's Training and Education Programme," WIDER Working Paper Series wp-2014-068, World Institute for Development Economic Research (UNU-WIDER).
    10. Links, Calumet & Green, Erik & Fourie, Johan, 2018. "Was Slavery a Flexible Form of Labour? Division of Labour and Location Specific Skills on the Eastern Cape Frontier," African Economic History Working Paper 42/2018, African Economic History Network.
    11. repec:ldr:wpaper:92 is not listed on IDEAS
    12. Mr. Alberto Behar, 2015. "Comparing the Employment-Output Elasticities of Expatriates and Nationals in the Gulf Cooperation Council," IMF Working Papers 2015/191, International Monetary Fund.
    13. Rankin, Neil & Roberts, Gareth & Schöer, Volker, 2014. "The success of learnerships? Lessons from South Africa's training and education programme," WIDER Working Paper Series 068, World Institute for Development Economic Research (UNU-WIDER).

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