As mentioned in the Introduction, much of the recent interest in shift-work among those concerned with developing countries derives from the hope that increased use of multiple shifts will contribute to solution of the employment problem. In Chapter 0 we explained why the phenomenon of substitution qualifies the favorable effects of shift-work on employment. To recapitulate, if the capital stock of the factory is taken as given, or if substitution possibilities are deemed to be absent, then increasing the number of shifts from one to two will double total employment per unit of capital stock. However, when the capital stock is regarded as endogenous and substitution possibilities are present, the choice of the double-shift system increases total employment per unit of capital stock by less than 100%, perhaps much less. One of the purposes of the present chapter is to present a theoretical treatment of this question.

The analysis of policy changes in a decentralized economy depends critically on whether or not the capital stock of factories is regarded as fixed. If it is, then a “big-push” policy package of increasing aggregate demand becomes quite appealing, because it seems that firms can increase output quite substantially by adopting multiple shifts. But if the capital stock of each factory can change, then the increase in aggregate demand may lead to an investment boom and to increased inflation instead of to the desired increase in multiple-shift operation.