Explanations of the demand for labour in the United Kingdom engineering sector

This paper presents a set of employment functions for nine individual engineering industries using annual data for the period 1954–1987 for the United Kingdom. A brief review alternative theoretical specifications is undertaken. A set of co-integrating regressions is computed to establish the existence of a long-run equilibrium relationship between employment and inter aliaoutput and real wages. Based on the results of the co-integration exercise, full unrestricted dynamic equations are obtained and these are then reduced to a more parsimonious representation. The finally preferred restricted models are then tested against a number of diagnostic statistical criteria to establish their robust and efficient properties. The value of these equations for explaining past and predicting future employment and training in the engineering sector is assessed.