Short-run employment functions for Irish manufacturing

Abstract

Cyclical fluctuations in employment are a major concern of policy makers. When an industry's output changes, the level of employment also changes - but usually only with a time lag. Sensible policy and economic planning by the government requires knowledge o f the magnitude of the response in employment which will follow the output change and the speed with which it will take place. The extent of response and the speed of adjustment differs quite considerably from industry to industry. For total maufacturing only 25 per cent of the eventual adjustment is made in the first quarter, a further 25 per cent of the balance in the next quarter and so on. Taken industry by industry, speeds of adjustment are faster in Ireland than in the United Kingdom probably as the result of higher unemployment rates in Ireland.