Investments,wages, prices and demand for labour

Summary Since 1971 the employment in the Netherlands has continuously decreased. Apart from the decrease caused by the recent depression, particularly in the year 1975, the decrease is a more pronounced continuation of a tendency which is manifest already in a number of years before. In this paper an attempt is made to explain the structural development of employment by means of a clay-clay vintage model. It appears that the unfavourable development of employment is connected with the accelerated growth of real labour costs in the past decade.This article is a translation of a revised and somewhat extended version of a paper published earlier in Dutch: H. den Hartog and H. S. Tjan,Investeringen, lonen, prijzen en arbeidsplaatsen, Central Planning Bureau, Occasional Paper, 1974/2, The Hague, 1974. This revised version of the clay-clay vintage model was introduced into a much more complete model of the economy of the Netherlands in: H. den Hartog, Th. C. M. J. van de Klundert and H. S. Tjan, De structurele ontwikkeling van de werkgelegenheid in macro-economisch perspectief, inWerkloosheid, Preadviezen van de Vereniging voor de Staathuishoudkunde, The Hague, 1975.