[1] Rashid Amjad, ILO, personal communication, Aug., 1999
[2] This is usually up to 15 years into the future simply because it takes that amount of time for entrants into the education system to graduate in their early twenties - obviously this time can be lengthened depending upon the type of education system the problem under consideration etc.
[3] Probably, the most sophisticated analysis of future demands for occupations is done by the US Bureau of Labor (see BLS web site http://stats.bls.gov/) but this involves a tremendous amount of inputs and analysis. A rough estimate is that at least 100 person years of work has gone into the BLS model.
[4] This chapter was originally based upon a chapter that appeared in M. Hopkins: Unemployment and Underemployment: The case of Colombia, (Westview, London and New York, 1983). This chapter has been considerably updated to take account of developments since then. As will be seen I use the term 'unemployment' as shorthand for the wider issue of labour underutilisation .
[5] Jean Waelbroeck: "Half a century of development economics: A Review based upon the Handbook of Development Economics", in The World Bank Economic Review, Vol. 12, No. 2, pp323-352, The World Bank, Washington, 1998.
[6] Clearly Keynes' General Theory of Employment was a major exception.
[7] J Kornai: 'The dilemmas of a socialist economy: The Hungarian experience', in Cambridge Journal of Economics,
[8] Some of the subsequent discussion in this section comes from Irma Adelman: Theories of economic growth and development (Stanford, California, Stanford University Press, 1961). Adelman, at that time, discussed five main theories of development (Adam Smith, Ricardo, Karl Marx, Schumpeter and neo-Keynesian) and suggests a neo-Keynesian model of a growing economy. Her general framework of analysis is a production function Yt = f(Kt, Nt, Lt, St, Ut), where Kt = capital, Nt = rate of use of natural resources, Lt = employment, St represents societies' fund of knowledge, and Ut represents the socio-cultural milieu within which the economy operates. Since most of the discussion reported here is well known, only brief summaries are given. The reader requiring more information is referred to the texts cited.
[9] A. Smith: The wealth of nations (New York, Random House, 1937), p. 69.
[10] Source: P. Samuelson: Economics (New York, McGraw-Hill, 8th ed., 1975), p. 551.
[11] ibid.
[12] This is discussed in M. Hopkins et al.: 'Evaluating a basic needs strategy and population growth', in International Labour Review (Geneva, ILO), May 1976.
[13] E. Hagen: The economic theory of development (Mexico/Buenos Aires, Centro Regional de Ayuda Tecnica, 1968).
[14] D. Ricardo: The principles of political economy and taxation (London, Dent, 1937). cit.
[15] Celso Furtado: Teoria política del desarrollo economico (Mexico, Siglo XXI, 8th ed., 1979).
[16] K. Marx: Capital, Vol. 3 (New York, International Publishers, 1967), Part III.
[17] R. Eckaus: 'The factor proportions problem in underdeveloped areas', in American Economic Review (Nashville, Tennessee), Sep. 1955.
[18] E. Domar: Essays in the theory of economic growth (New York, Oxford University Press, 1957), see also R. G. D. Allen: Macro economic theory (London, Macmillan, 1968).
[19] R. Solow: 'A contribution to the theory of economic growth', in Quarterly Journal of Economics (Cambridge, Mass.), Feb. 1956.
[20] idem: 'On theories of unemployment', in American Economic Review, Presidential address (Nashville, Tennessee), Mar. 1980.
[21] A.C. Pigou: Lapses from full employment (London, Macmillan, 1945).
[22] Among many other places this is argued forcefully by Nobel Laureate L. R. Klein in The Keynesian revolution (New York, Macmillan, 1961 (first published in 1947))
[23] idem.
[24] John Maynard Keynes: The general theory of employment, interest and money (London Macmillan; New York, St. Martin's Press, 1936), Ch. 2.
[25] Pigou (1945), op. cit.
[26] J.A. Schumpeter: 'The present world depression', in American Economic Review (Nashville, Tennessee), Vol. XXI, 1931, p. 179.
[27] J. Schumpeter: Capitalism, socialism and democracy (New York, Harper, 3rd ed., 1950).
[28] T. Schultz, 'Investment in population quality throughout low-income countries', in P. Hauser (ed.): World Population and Development: Challenges and Prospects, (Syracuse, 1979).
[29] J. Stiglitz, 'The new development economics', World Development, (Vol.14, No.2, February 1986).
[30] Keynes: The general theory . . ., op. cit.
[31] Klein: The Keynesian revolution . . ., op. cit.
[32] See, for example, P. Sweezy: 'What has Keynes contributed to the analysis of capitalism?', in Science and Society (New York), Oct. 1946.
[33] See P. Kenway: 'Marx, Keynes and the possibility of crisis, in Cambridge Journal of Economics (Cambridge), 1980.
[34] V.V. Bhatt: Sterility of equilibrium economics (Washington, DC, Economic Development Institute, World Bank, 1974).
[35] A. Berry and R. Sabot: 'Labour market performance in developing countries: A survey', in World Development (Oxford), Nov.-Dec. 1978.
[36] W. B. Reddaway: 'The economics of underdeveloped countries', in Economic Journal (London), Mar. 1963.
[37] A. Wood: North-South Trade, Employment and Inequality: Changing Fortunes in a Skill-Driven World, Clarendon Press, Oxford, 1994.
[38] J. Kornai: The economics of shortage (Amsterdam, North-Holland, 1980).
[39] Kornai: 'The dilemmas of a socialist economy . . .', op.cit.
[40] P. Krugman: "Toward a counter-counterrevolution in development theory", Proceedings of the World Bank Annual Conference on Development Economics, World Bank, 1993
[41] I. Little: Economic Development, New York, 20th Century Fund, 1982.
[42] J. Stiglitz, "Comment on Krugman", Proceedings of the World Bank Annual Conference on Development Economics, World Bank, 1993
[43] L. Jayawardena, "Comment on Krugman", Proceedings of the World Bank Annual Conference on Development Economics, World Bank, 1993
[44] Arthur Lewis: 'Economic development with unlimited supplies of labour', in Manchester School (Manchester), 20 May 1954, pp. 139-191.
[45] Hagen, op. cit.
[46] See, for example, Isidro Parra-Pena: 'Capitalismo periférico y subdesarrollo', in Comercio Exterior (Mexico City), Nov. 1979, pp. 1233-1242.
[47] ECLA is the acronym for the United Nations Economic Commission for Latin America (ECLA) - CEPAL is its Spanish acronym.
[48] Krugman (1993, op.cit.) called high development theory the nexus between external economy, balanced growth, the concept of linkages and the surplus labour doctrine. This ran from the big push theory of Rosenstein-Rodan (Paul N Rosenstein-Rodan: "Problems of Industrialisation in Eastern and South-Eastern Europe", Economic Journal 53, June-September, 202-11, 1943.) in 1943 and ended with Hirschman (see next footnotebut one) in 1958. This was recaptured into the Washington consensus in the 1980s.
[49] Diana Hunt: Economic Theories of Development - An Analysis of Competing Paradigms, (Harvester Wheatsheaf, Hemel Hempstead, UK, 1989)
[50] A. Hirschmann: The Strategy of Economic Development, (Yale, 1958).
[51] See Michael Hopkins and Rolph Van Der Hoeven: Basic needs in development planning (London, Gower, 1983).
[52] This is reviewed in more detail in Michael Hopkins: 'Key issues in the United Nations Development Programme's Human Development Reports, 1990-3', Development Southern Africa, (Johannesburg, Vol. 10, No.4, November 1993).
[53] T. Schultz, op.cit.
[54] S. Sweetland: "Human Capital Theory - Foundations of a field of inquiry", Review of Educational Research, vol.66, No.3, pp341-59, 1996.
[55] Richard B. Freeman: 'Labour market institutions and policies: Help or hindrance to Economic Development?', Proceedings of the 1992 World Bank annual conference on Development Economics, (The World Bank, Washington, 1993).
[56] J. Waelbrock, op.cit., 1998
[57] See for example ILO: 'Patterns of Employment Growth Under Changing Conditions of Labour Supply and Demand', (ILO Governing Body Report, GB258/CE/3/1, Oct.1993); Tony Addison: 'Employment and earnings', in Lionel Demery, Marco Ferroni, Christian Grootaert (eds.): Understanding the Social Effects of Policy Reform, (The World Bank, Washington, March 1993); Guy Standing & Victor Tokman: Towards social adjustment - Labour Market Issues in structural adjustment, (ILO, Geneva, 1991).
[58] Stephen Mangum, Garth Mangum & Janine Bowen: 'Strategies for Creating Transitional Jobs during Structural Adjustment', Education & Employment Working papers, (PHRD/World Bank, WPS 947, August 1992).
[59] F. H. Hahn: "On Walrasian equilibria", Review of Economic Studies, vol.45, pp1-17, 1978.
[60] M. Friedman: Essays in Positive Economics, University of Chicago Press, 1953.
[61] M. Friedman, op.cit.
[62] Ben Fine: Labour Market Theory, Routledge, London, 1998.
[63] R. Solow: "Unemployment: getting the Questions Right", in C. Bean et .al (ed.) The Rise in Unemployment, Oxford, Blackwell, 1987.
[64] P. Doeringer and M.Piore: Internal Labour Markets and Manpower Analysis, Lexington, 1971.
[65] L. Squire: "Labour force, employment and labour markets in the course of economic development:, World Bank Staff Working paper, No.336, June 1979.
[66] L.Squire, op.cit.
[67] K. Hart: "Informal income opportunities and urban employment in Ghana", Journal of Modern African Studies, (London), Vol. II, No.1 , Mar. 1973.
[68] ILO, Employment, Incomes and equality in Kenya, Geneva, 1972.
[69] J. Harris and M. Todaro: "Migration, unemployment and development: a two sector analysis", American Economic Review, Vol. 60, No.1, March, 1970.
[70] R. Hayter and T. Barnes: "Labour market segmentation theory. Flexibility and recession - a British Columbia Case Study", Environment and Planning, vol. 10, No.3, pp333-53, 1992.
[71] This section draws from both Ben Fine (1998, op.cit.) and Krugman ( 1993, op.cit.)
[72] P. Romer: "Increasing returns and long-run growth", Journal of Political Economy, 94 (5), 1002-37, 1986 and P.M. Romer: "Human capital and growth: theory and evidence", Journal of Political Economy,No.98, 1989.
[73] R. E. Lucas: "On the mechanics of economic development", Journal of Monetary Economics, No.22, 3-42, 1988
[74] M. Hopkins: The Planetary Bargain: Corporate Social Responsibility Comes of Age, Macmillan, Basingstoke, UK, 1999.
[75] R. Solow: "Another possible source of wage stickiness", Journal of Macroeconomics, vol 1, no. 1, pp.79-82.
[76] D, Sapsford and A. Tzannatos: The Economics of the Labour Market, (Macmillan, Basingstoke, 1993), p.408.
[77] R. Layard, S. Nickell, R. Jackman: Unemployment: Macroeconomic Performance and the Labour Market (Oxford University Press, Oxford, 1991), p.171
[78] R. Layard et.al., op.cit., p. 206
[79] S.J. Grossman, O.D. Hart, E.S. Maskin: "Unemployment with Observable Aggregate Shocks", Journal of Political Economy, 91 (6):907-28
[80] Guy Standing: Global Labour Flexibility: Seeking Distributive Justice, Macmillan, Basingstoke, UK, 1999
[81] D. Sapsord and Z. Tzannatos: The Economics of the Labour Market, Macmillan, Basingstoke, UK, 1993
[82] Author's calculations.
[83] described in R. Hussmanns et. al. (op.cit.)
[84] The model was originally developed by the present author in the early 1980s and a version of it was applied to Ecuador (Hopkins, 1986). The model has continued to evolve through work by the present author and Prof. Odd Gulbrandsen (Hopkins, 1992). Over 1983 to 1994 the model, and variants of it, has been applied at the national level by the author to Ecuador, Panama, Netherlands Antilles, Pakistan (by Gulbrandsen), Indonesia, Tunisia, Thailand, Sri Lanka, Malaysia and, most recently (1998), the model was applied to the North Eastern region of South Africa.
[85] 2 The package can aso be used for regions of a country or focus on particular economic sectors such as agriculture.
[86] Table C-6 (B) in Appendix C of The Methods and Materials of Demography, Henry S. Shryock, Jacob S. Siegel and Associates, Condensed Edition by Edward G. Stockwell, Academic Press, New York, l976.
[87] This table can be changed for specific countries that have their own life table
[88] In the equations, rates and percentages are expressed as fractions of unity, for example 1 percent as 0.01.
[89] This chapter draws from work performed for USAID by the author in 1991 under USAID/Sri Lanka's Development Studies and Training Project that provided technical and related support to the Department of National Planning in the Ministry of Policy Planning and Implementation (MPPI).
[90] The population of school age can enter school at any age in the model although most enter at age 6. Probabilities of entering school for ages 5 to 8 are used in the model to determine entry.
[91] 1985/1986 Socio-economic labour Force Survey, Department of Census and Statistics, GoSL (SEL).
[92] The problem could also have been due to an initial incompatibility of the labour force by education level and the education data - there is no way of knowing apriori and hence rates were changed rather than levels.
[93] P.J. Alailima: 'Education-Employment Linkages - The Macro Profile', (mimeo, Ministry of Planning and Policy Implementation, Colombo, 1991).
[94] Demographers will note that females are to the left of the graph and that the pyramid has a 'hat'. Since the main aim of the model is not precise demographic projections these characteristics were chosen to fit in with the rest of the model's convention and to keep the graph manageable.
[95] Ministry of Policy Planning and Implementation, 'Sri Lanka Economic Prospects for the 1990s', (August 1991, mimeo).
[96] Sri Lanka Economic Prospects for the 1990s (op.cit.)
[97] Newly Industrialising Country
[98] Clearly, an analysis of the experiences of the fast growing NICs in quantitative terms would give much greater precision to this scenario and is something that the MPPI might be interested in researching.
[99] The research described here was performed in Vietnam in early 1999 with support from the Asian Development Bank (ADB)
[100] But see Michael Hopkins: Training Needs In Vietnam: With related labor market and methodological issues, Asian Development Bank Monograph, Manila, 1999
[101] 3 Lothar Richter: Training Needs Assessment and Monitoring, ILO. Geneva. 1982. p. 45..
[102] The questionnaires are available on request from the author - mjdhopkins@csi.com