Trade, Capital Accumulation, and Structural Unemployment: An Empirical Study of the Singapore Economy
The past three and a half decades witnessed a distinctly declining trend in Singapore's unemployment rate, which dropped from an average annual rate of 7.85 percent in 1966-70 to 2.74 percent in 1991-2000. The authors seek to identify and empi...
| Main Authors: | , |
|---|---|
| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, D.C.
2013
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2004/04/4132786/trade-capital-accumulation-structural-unemployment-empirical-study-singapore-economy http://hdl.handle.net/10986/14110 |
| id |
okr-10986-14110 |
|---|---|
| recordtype |
oai_dc |
| spelling |
okr-10986-141102021-04-23T14:03:20Z Trade, Capital Accumulation, and Structural Unemployment: An Empirical Study of the Singapore Economy Looi Kee, Hiau Teck Hoon, Hian AVERAGE ANNUAL GROWTH BASE YEAR CAPITAL ACCUMULATION CAPITAL FORMATION CAPITAL GOODS CAPITAL INPUT CAPITAL INVESTMENT CAPITAL STOCK CAPITAL-LABOR CAPITAL-LABOR RATIO CONSTANT RETURNS CONSTANT RETURNS TO SCALE DEFLATORS DEMAND CURVE DEMAND CURVES DEMAND ELASTICITY DISINFLATION ECONOMICS RESEARCH ECONOMISTS ELASTICITY EMPLOYMENT MODELS ENDOGENOUS VARIABLES EQUILIBRIUM EQUILIBRIUM MODELS EQUILIBRIUM RETURN EXOGENOUS VARIABLES EXPORTS FACTOR RETURNS FACTOR REWARDS FACTORS OF PRODUCTION FIRST YEAR FOREIGN DIRECT INVESTMENT FULL EMPLOYMENT FUTURE RESEARCH GDP GDP DEFLATOR GROSS INVESTMENT GROWTH RATE GROWTH RATES HOUSING INCOME INCREASE IN CAPITAL INFLATION INFLATION RATE INFLATION RATES INSURANCE INTERMEDIATE INPUTS INTERNATIONAL TRADE INVENTORY LABOR DEMAND LABOR FORCE LABOR MARKET LABOR MOBILITY LABOR STATISTICS LABOR SUPPLY LABOR UNIONS LIQUIDITY MARGINAL PRODUCT MARGINAL PRODUCTIVITY MARKET OUTCOMES MINIMUM WAGE NATURAL RATE HYPOTHESIS NATURAL RATE OF UNEMPLOYMENT NEOCLASSICAL ASSUMPTIONS OPTIMIZATION PENSIONS PERFECT COMPETITION PHILLIPS CURVE PRICE ELASTICITY PRODUCTION FUNCTION PRODUCTIVITY GROWTH PUBLIC HOUSING RANDOM WALK REAL INCOME REAL WAGE RETIREMENT SAVINGS STRUCTURAL UNEMPLOYMENT SUBSIDIARIES SUPPLY CURVE TOTAL CAPITAL STOCK TOTAL LABOR FORCE TRADE UNIONS TRANSPORT UNEMPLOYED UNEMPLOYED WORKER UNEMPLOYMENT UNEMPLOYMENT BENEFITS UNEMPLOYMENT COMPENSATION UNEMPLOYMENT RATE UPWARD SHIFT UTILITY FUNCTION WAGES WEALTH TRADE UNEMPLOYMENT RATE INFLATION & UNEMPLOYMENT TRADE UNIONS EXPORT PRICES INCOME WAGES LABOR DEMAND TRADING SYSTEMS CAPITAL INCOME The past three and a half decades witnessed a distinctly declining trend in Singapore's unemployment rate, which dropped from an average annual rate of 7.85 percent in 1966-70 to 2.74 percent in 1991-2000. The authors seek to identify and empirically examine the factors that have influenced Singapore's unemployment rate in an environment of low and stable inflation. They incorporate a union bargaining framework into a standard-factors trade model, in which an increase in the relative price or capital stock in the export sector raises the demand wage that firms can afford to pay relative to workers' fall-back income, and consequently lowers equilibrium unemployment. The magnitude of the effects depends on the fall-back income, the weight unions attach to employment, and the elasticity of labor demand, which the authors estimate using data on Singapore. The results show that labor unions in Singapore care more about employment than wages. Together with a small fall-back income and elastic labor demand, the authors show that given the same percentage change in relative export prices and capital accumulation in the export sector, the effect on unemployment is larger for the former. However, the empirical importance of capital accumulation in the export sector dominates increases in relative export prices in reducing unemployment since the manufacturing sector experienced a tremendous increase in capital inputs throughout the sample period, whereas the relative price of exports experienced a far smaller increase and only in the early part of the sample period. The authors conclude that through a very open trading regime, the tremendous increase in capital stock of the exporting sector has been the main reason behind Singapore's declining unemployment rate. 2013-06-21T15:40:52Z 2013-06-21T15:40:52Z 2004-04 http://documents.worldbank.org/curated/en/2004/04/4132786/trade-capital-accumulation-structural-unemployment-empirical-study-singapore-economy http://hdl.handle.net/10986/14110 English en_US Policy Research Working Paper;No.3272 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, D.C. Publications & Research :: Policy Research Working Paper Publications & Research East Asia and Pacific Singapore |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
AVERAGE ANNUAL GROWTH BASE YEAR CAPITAL ACCUMULATION CAPITAL FORMATION CAPITAL GOODS CAPITAL INPUT CAPITAL INVESTMENT CAPITAL STOCK CAPITAL-LABOR CAPITAL-LABOR RATIO CONSTANT RETURNS CONSTANT RETURNS TO SCALE DEFLATORS DEMAND CURVE DEMAND CURVES DEMAND ELASTICITY DISINFLATION ECONOMICS RESEARCH ECONOMISTS ELASTICITY EMPLOYMENT MODELS ENDOGENOUS VARIABLES EQUILIBRIUM EQUILIBRIUM MODELS EQUILIBRIUM RETURN EXOGENOUS VARIABLES EXPORTS FACTOR RETURNS FACTOR REWARDS FACTORS OF PRODUCTION FIRST YEAR FOREIGN DIRECT INVESTMENT FULL EMPLOYMENT FUTURE RESEARCH GDP GDP DEFLATOR GROSS INVESTMENT GROWTH RATE GROWTH RATES HOUSING INCOME INCREASE IN CAPITAL INFLATION INFLATION RATE INFLATION RATES INSURANCE INTERMEDIATE INPUTS INTERNATIONAL TRADE INVENTORY LABOR DEMAND LABOR FORCE LABOR MARKET LABOR MOBILITY LABOR STATISTICS LABOR SUPPLY LABOR UNIONS LIQUIDITY MARGINAL PRODUCT MARGINAL PRODUCTIVITY MARKET OUTCOMES MINIMUM WAGE NATURAL RATE HYPOTHESIS NATURAL RATE OF UNEMPLOYMENT NEOCLASSICAL ASSUMPTIONS OPTIMIZATION PENSIONS PERFECT COMPETITION PHILLIPS CURVE PRICE ELASTICITY PRODUCTION FUNCTION PRODUCTIVITY GROWTH PUBLIC HOUSING RANDOM WALK REAL INCOME REAL WAGE RETIREMENT SAVINGS STRUCTURAL UNEMPLOYMENT SUBSIDIARIES SUPPLY CURVE TOTAL CAPITAL STOCK TOTAL LABOR FORCE TRADE UNIONS TRANSPORT UNEMPLOYED UNEMPLOYED WORKER UNEMPLOYMENT UNEMPLOYMENT BENEFITS UNEMPLOYMENT COMPENSATION UNEMPLOYMENT RATE UPWARD SHIFT UTILITY FUNCTION WAGES WEALTH TRADE UNEMPLOYMENT RATE INFLATION & UNEMPLOYMENT TRADE UNIONS EXPORT PRICES INCOME WAGES LABOR DEMAND TRADING SYSTEMS CAPITAL INCOME |
| spellingShingle |
AVERAGE ANNUAL GROWTH BASE YEAR CAPITAL ACCUMULATION CAPITAL FORMATION CAPITAL GOODS CAPITAL INPUT CAPITAL INVESTMENT CAPITAL STOCK CAPITAL-LABOR CAPITAL-LABOR RATIO CONSTANT RETURNS CONSTANT RETURNS TO SCALE DEFLATORS DEMAND CURVE DEMAND CURVES DEMAND ELASTICITY DISINFLATION ECONOMICS RESEARCH ECONOMISTS ELASTICITY EMPLOYMENT MODELS ENDOGENOUS VARIABLES EQUILIBRIUM EQUILIBRIUM MODELS EQUILIBRIUM RETURN EXOGENOUS VARIABLES EXPORTS FACTOR RETURNS FACTOR REWARDS FACTORS OF PRODUCTION FIRST YEAR FOREIGN DIRECT INVESTMENT FULL EMPLOYMENT FUTURE RESEARCH GDP GDP DEFLATOR GROSS INVESTMENT GROWTH RATE GROWTH RATES HOUSING INCOME INCREASE IN CAPITAL INFLATION INFLATION RATE INFLATION RATES INSURANCE INTERMEDIATE INPUTS INTERNATIONAL TRADE INVENTORY LABOR DEMAND LABOR FORCE LABOR MARKET LABOR MOBILITY LABOR STATISTICS LABOR SUPPLY LABOR UNIONS LIQUIDITY MARGINAL PRODUCT MARGINAL PRODUCTIVITY MARKET OUTCOMES MINIMUM WAGE NATURAL RATE HYPOTHESIS NATURAL RATE OF UNEMPLOYMENT NEOCLASSICAL ASSUMPTIONS OPTIMIZATION PENSIONS PERFECT COMPETITION PHILLIPS CURVE PRICE ELASTICITY PRODUCTION FUNCTION PRODUCTIVITY GROWTH PUBLIC HOUSING RANDOM WALK REAL INCOME REAL WAGE RETIREMENT SAVINGS STRUCTURAL UNEMPLOYMENT SUBSIDIARIES SUPPLY CURVE TOTAL CAPITAL STOCK TOTAL LABOR FORCE TRADE UNIONS TRANSPORT UNEMPLOYED UNEMPLOYED WORKER UNEMPLOYMENT UNEMPLOYMENT BENEFITS UNEMPLOYMENT COMPENSATION UNEMPLOYMENT RATE UPWARD SHIFT UTILITY FUNCTION WAGES WEALTH TRADE UNEMPLOYMENT RATE INFLATION & UNEMPLOYMENT TRADE UNIONS EXPORT PRICES INCOME WAGES LABOR DEMAND TRADING SYSTEMS CAPITAL INCOME Looi Kee, Hiau Teck Hoon, Hian Trade, Capital Accumulation, and Structural Unemployment: An Empirical Study of the Singapore Economy |
| geographic_facet |
East Asia and Pacific Singapore |
| relation |
Policy Research Working Paper;No.3272 |
| description |
The past three and a half decades
witnessed a distinctly declining trend in Singapore's
unemployment rate, which dropped from an average annual rate
of 7.85 percent in 1966-70 to 2.74 percent in 1991-2000. The
authors seek to identify and empirically examine the factors
that have influenced Singapore's unemployment rate in
an environment of low and stable inflation. They incorporate
a union bargaining framework into a standard-factors trade
model, in which an increase in the relative price or capital
stock in the export sector raises the demand wage that firms
can afford to pay relative to workers' fall-back
income, and consequently lowers equilibrium unemployment.
The magnitude of the effects depends on the fall-back
income, the weight unions attach to employment, and the
elasticity of labor demand, which the authors estimate using
data on Singapore. The results show that labor unions in
Singapore care more about employment than wages. Together
with a small fall-back income and elastic labor demand, the
authors show that given the same percentage change in
relative export prices and capital accumulation in the
export sector, the effect on unemployment is larger for the
former. However, the empirical importance of capital
accumulation in the export sector dominates increases in
relative export prices in reducing unemployment since the
manufacturing sector experienced a tremendous increase in
capital inputs throughout the sample period, whereas the
relative price of exports experienced a far smaller increase
and only in the early part of the sample period. The authors
conclude that through a very open trading regime, the
tremendous increase in capital stock of the exporting sector
has been the main reason behind Singapore's declining
unemployment rate. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Looi Kee, Hiau Teck Hoon, Hian |
| author_facet |
Looi Kee, Hiau Teck Hoon, Hian |
| author_sort |
Looi Kee, Hiau |
| title |
Trade, Capital Accumulation, and Structural Unemployment: An Empirical Study of the Singapore Economy |
| title_short |
Trade, Capital Accumulation, and Structural Unemployment: An Empirical Study of the Singapore Economy |
| title_full |
Trade, Capital Accumulation, and Structural Unemployment: An Empirical Study of the Singapore Economy |
| title_fullStr |
Trade, Capital Accumulation, and Structural Unemployment: An Empirical Study of the Singapore Economy |
| title_full_unstemmed |
Trade, Capital Accumulation, and Structural Unemployment: An Empirical Study of the Singapore Economy |
| title_sort |
trade, capital accumulation, and structural unemployment: an empirical study of the singapore economy |
| publisher |
World Bank, Washington, D.C. |
| publishDate |
2013 |
| url |
http://documents.worldbank.org/curated/en/2004/04/4132786/trade-capital-accumulation-structural-unemployment-empirical-study-singapore-economy http://hdl.handle.net/10986/14110 |
| _version_ |
1764430215231045632 |