Determinants of Employment, Wage and Productivity
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This chapter econometrically investigates the determinants of real wage, productivity and employment in the manufacturing sector by firm size and factor intensity. This exercise is important to identify policy instruments in order to influence their trends at various levels to achieve the desired objective of guiding the economy towards a high-wage and high-productivity trajectory and to address socio-economic deprivation such as working poverty and earnings inequality. The chapter begins with an examination of wage and productivity functions, followed by employment functions. The chapter finds that the modern and dynamic LM section of manufacturing industry displays an ideal outcome where wages and employment increase when the overall economy (gross domestic product) expands. This finding across firm size and factor intensity should affirm the call for re-industrialisation to reverse the trend of premature de-industrialisation since the 1997–1998 Asian financial crisis.
KeywordsEmployment Function Real Wages (RW) Identify Policy Instruments Small And Medium Enterprises (SMEs) First-step Regression
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