Research Discussion Paper – RDP 9403 Capital Constraints and Employment


This paper considers whether capital is a significant constraint on employment in Australia. We calculate the level of capital-constrained employment for ten sectors of the Australian economy. The calculations suggest that the manufacturing; mining; transport, storage and communication and recreation, personal and other services sectors have sufficient capital installed to increase employment. In another sector, wholesale and retail trade, the potential for increases in employment through increased capital utilisation may be constrained by surplus labour (as of June 1993). While some sectors, e.g. community services, are capital constrained at the moment, we find that the investment requirements to increase employment in these sectors are not onerous. We also project investment requirements in each of the sectors for employment growth over the next five years. These projections suggest that a jump in investment followed by relatively modest growth is required to sustain growth in employment.

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