Conflicts between Out-put and Employment Objectives in Developing Countries

Abstract

Neither of the objectives, maximum output and maximum employment, is unambiguous. The output objective is ambiguous because output at any time consists of a heterogeneous collection of goods. Types of employment, in duration — daily, weekly, and seasonally — in effort and by regions, etc., also differ. In addition, both output and employment occur over time. Current levels of output and employment may influence future levels. Weighting therefore both intra- and inter-temporally is crucial to the definition of the objectives. However, we shall begin by ignoring these ambiguities and assume that our sole concern is with current levels of output and employment, and that maximising current levels automatically leads to achievement of future objectives, or put more formally, that maximising the present value of the entire streams of output and employment over time. We shall also begin by assuming that there is a single index for output and one for employment.

We are grateful to Gavan J. Butler, M. FG. Scott and Professor H. W. Singer for helpful comments.