A disaggregative approach to employment in LDCs

Abstract

This paper shows that the current aggregative explanations of growth in ‘tertiary’ sector output and employment in the less developed countries (LDCs) are not satisfactory. It is argued that Colin Clark's celebrated hypothesis that the percentage share of tertiary output and employment rises with increases in per capita incomes, has often been misinterpreted in the context of the LDCs' economies. The paper proposes disaggregate employment functions for wage labour, self‐supporting labour (owner‐operators) and family labour. This type of labour disaggregation is designed to examine whether the simple demand rationale which ignores ‘supply effects’ is appropriate in the context of an hypothesis of unlimited supplies of labour.