Open AccessThe Significant Variables of Full Employment and their Explanatory Values
Author(s) -
I. Ul Haque
Publication year - 1994
Publication title -
pakistan development review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.154
H-Index - 26
ISSN - 0030-9729
DOI - 10.30541/v33i4iipp.1345-1356
Subject(s) - economics , endowment , capital (architecture) , production (economics) , unit (ring theory) , labour economics , scale (ratio) , capital intensity , resource (disambiguation) , human capital , macroeconomics , market economy , history , philosophy , physics , mathematics education , mathematics , archaeology , epistemology , quantum mechanics , computer network , computer science
Technology in the nineteenth century was designed according tothe prevailing resource endowment and was labour intensive asindustrialised countries in the 19th century invented their owntechnology as their resource endowment demanded -capital had to be foundfrom personal savings of the investors-which acted as a check ondevelopment of technologies making high demand on capital. In such aneconomic environment there was a direct and positive linkage betweenoutput and employment. Employment being thus a linear function ofoutput, the employment optimisation path coincided with the outputoptimisation path. Not so now. The latecomers in the industrial field inthe twentieth century have to select from the availablecapital-intensive technologies designed for a labour saving mode ofproduction. A conflict between output and employment thus arose becauseof (1) the labour-intensive technologies higher capital input and higherprice per unit of output arising out of the limited scale of production,as against the capital-intensive technologies, lower capital input andlower price per unit of output arising out of larger scale of economy.The resulting trade-off between output and employment involves a morecomplex question of the weightage to be given to current as againstfuture output compared with the weightage to be given to current asagainst future employment. Optimum welfare would therefore result frommaximising current output and employment by maximising the present valueof the entire streams of output and employment over time.