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EMPLOYMENT, CAPITAL, AND PRODUCTIVITY DYNAMICS: EVIDENCE FROM THE MANUFACTURING SECTOR IN URUGUAY
Author(s) -
CASACUBERTA CARLOS,
FACHOLA GABRIELA,
GANDELMAN NéSTOR
Publication year - 2011
Publication title -
the developing economies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.305
H-Index - 30
eISSN - 1746-1049
pISSN - 0012-1533
DOI - 10.1111/j.1746-1049.2011.00135.x
Subject(s) - productivity , labour economics , economics , manufacturing sector , currency , capital (architecture) , wage , capital intensity , total factor productivity , sample (material) , negotiation , monetary economics , demographic economics , business , human capital , macroeconomics , market economy , geography , chemistry , archaeology , chromatography , political science , law
Using a sample of Uruguayan manufacturing establishments we analyze employment, capital, and productivity dynamics over a period of currency appreciation; changes in trade policy; and changes in the institutional setting of wage negotiations. As the relative capital–labor price ratio fell, capital intensity increased. At the same time, there was an increase in labor and total factor productivity. Creation and destruction rates were relatively high and pervasive over time, sectors, establishment size, and establishment age, with exits explaining a sizeable part of destruction rates. Most of the excess reallocation was due to movements “within” rather than “between” sectors. Thus, high reallocation rates were linked to establishment‐level heterogeneity rather than aggregate shocks.