Research and Development, Utilization and Labor Requirements: A Dynamic Analysis

27 Pages Posted: 28 Jun 2004

See all articles by Jeffrey I. Bernstein

Jeffrey I. Bernstein

Carleton University - Department of Economics; National Bureau of Economic Research (NBER)

M. Ishaq Nadiri

New York University (NYU) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: November 1982

Abstract

In this study we have developed a dynamic analysis of a firm under taking plant and equipment and research and development investment,along with labor requirement and P&E utilization decisions. It is shown that in the short run increases in R&D cause the utilization rate of plant and equipment to rise and to decrease demand for labor per unit of R&D. We distinguish between the effects of the stock of R&D and the investment flow. The short run effect of changes in the stock of R&Don labor demand are quite distinct from the behavior observed along the intertemporal path. Along the path increases in the R&D investment rate must be accompanied by an increase in the labor requirement per unitof R&D. Contrary to a view point held by many, the R&D investment flow does not displace labor. Finally, our model provides a framework to justify the empirically observed positive relationship between the utilization and the P&E investment rates.

Suggested Citation

Bernstein, Jeffrey I. and Nadiri, M. Ishaq, Research and Development, Utilization and Labor Requirements: A Dynamic Analysis (November 1982). NBER Working Paper No. w1016. Available at SSRN: https://ssrn.com/abstract=227184

Jeffrey I. Bernstein (Contact Author)

Carleton University - Department of Economics ( email )

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M. Ishaq Nadiri

New York University (NYU) - Department of Economics ( email )

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New York, NY 10011
United States
212-998-8968 (Phone)
212-995-4013 (Fax)

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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