Short Term Employment Functions in British Manufacturing Industry.

This paper was conceived as an extension of the major contribution by Frank Brechling in developing a recipe for explaining the short period behaviour of employment levels in British manufacturing industry [2]. The extension is both theoretical and empirical. On the theoretical side we make more explicit assumptions about the form of the short period production function and so develop a model similar to Brechling's, which can be related to the standard cost-minimizing model of neo-classical employment theory. From this we derive the short term equilibrium demand for labour, which added to an adjustment function, enables us to determine the short term employment level. The basic model is fitted to all industry aggregates, to total manufacturing industry and to fifteen sub-components of all industry covered by the industrial production index. We discuss the light that these estimates throw on the short period production functions, and the speeds of adjustment to equilibrium, paying particular attention to the cross-section results. [ABSTRACT FROM AUTHOR]