1. – Associate Professor, Avinashilingam Institute For Home Science & Higher Edu. For Women, Coimbatore
| Received
26-Oct-2012 |
Accepted
- |
Published
26-Oct-2012 |
Abstract
This paper concentrates on testing
returns to scale, elasticity of substitution
and efficiency wage hypothesis
(according to which the co-efficient
of wage rate is more than of
capital intensity) in transport equipment
industry. Augmented Dickey
Fuller Test, Cobb-Douglas Production
Function, Constant Elasticity of
Substitution (CES) and Variable
Elasticity of Substitution (VES) were
applied for the period 1991/92 –
2008/09. The increasing returns to
scale of the industry was proved with
the significant co-efficient of labor
input. There was neutral technical
progress. Co-efficient of wage rate
was statistically significant. Its numerical
value was close to unity indicating
unitary elasticity of substitution.
The results of VES production
function supported the hypothesis
of efficiency-wage.
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