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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Factor Substitution Possibilities and the Unemployment Problem in Kenya's Sugar Industry: Case Studies of Mwani and SONY Sugar Schemes
Author:Odada, John E.O.
Periodical:Eastern Africa Economic Review
Geographic term:Kenya
Subjects:production factors
cane sugar
Labor and Employment
Economics and Trade
Development and Technology
Abstract:Objective is to estimate the elasticity of factor substitution between capital and labour so as to establish the extent to which the underlying technology in the sugar cane production process allows substitution between farm machinery and labour. Three production function models, namely the Cobb-Douglas, the CES and the VES were fitted to the sugar cane data with a view to establishing the characteristics of the underlying technology. Results show that the elasticity of factor substitution between capital and labour is less than one. This is an indication that the relative share of labour in total output of the sugar industry can be significantly increased by increasing the wages paid to sugar cane workers at the farm level. Results suggest that the slow rate of growth of employment in the Kenyan sugar industry could be attributed, in part, to the existing imbalances in the relative prices of capital and labour and inappropriate choice of production techniques at the farm level. Notes, ref.