Abstract
Efficiency plays an important role in the operation of firms. If firms are pursing a policy of shareholder wealth maximisation, this implies that maximum efficiency is extracted from a firm’s resources during the production process, or that the minimum quantity of inputs are used to achieve a desired level of output. This is especially true in the case of labour demand and labour usage, as wage expenditure constitutes a significant portion of the average firm’s cost structure. Knowledge of relative inefficiencies in labour usage will therefore be of great interest to firm and, as such, academic studies on efficiency of labour demand in firms have been relatively forthcoming. These include work on the Indian farming industry [Kumbhakar (1996), Swedish social insurance offices [Kumbhakar and Hjalmarsson (1991)], Tunisian Manufacturing [Haouras, et al. (2003) and Kalimantanian rice production [Padoch (1985)].............
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