RDP 9403: Capital Constraints and Employment 4. Conclusion

The pattern of capital constraints on employment varies between sectors with some being capital constrained while others have excess capital. However, the results must be qualified due to the technical nature of the calculations and the possibility of errors in the data. A number of sectors, such as finance and business services, have problems that make the results for those sectors problematic. The investment projections are based on the assumption of constant real wages. Were real wages to change relative to the cost of capital, so too would the capital to labour ratios consistent with a given future rate of output growth, and thus the required amount of capital expenditure. As real wages will undoubtedly be changing this restricts the usefulness of the investment projections. Nonetheless, noting that a number of qualifications to this conclusion exist, the investment requirements for employment growth in the near future do not seem excessive after the initial jump.