CAPITAL ACCUMULATION, LABOR SAVING, AND LABOR ABSORPTION ONCE MORE.

This article discusses the general neoclassical statement of the labor absorption problem in the manufacturing sector in the developing countries, particularly in the Philippines. Like other developing nations, the Philippine government has imposed minimum wage legislation on industrial firms, introduced modern labor laws, and required firm contribution to social security, all of which has tended to raise the legal price of labor. No one has attempted to estimate the short-and-long-run impact of these policies. the one percent annual increase in real wages would result in a reduction of employment growth by 0.5 percent.