Estimating the Production Technology in the U.S. Forest Products Industries

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Abstract
Estimates of the parameters of the production technology in ten U.S. forest products industries are derived from the dual cost function. The results indicate that over the period 1958–74, technological progress has been Hicks neutral in the wooden container and building paper industries; in ail eight remaining industries efficiency gains were labor-saving. For the same eight industries, the elasticity of substitution between capital and labor was significantly less than unity; moreover, for the paperboard industries (SIC 263 and 265) the fixed coefficients production technology could not be rejected. Comparison with other studies indicates that short-run factor substitution possibilities are more limited in the forest products industries than in many other U.S. manufacturing industries. This limitation is also reflected in the price inelastic derived demand for capital and labor. Adjustments to the rising price of labor relative to capital have been through the adoption of labor-saving capital technology. As a consequence, the distributive share of labor has fallen at an average rate of 1-2 percent per year over the period 1958–74. The labor-saving bias of technological change can be expected to have its most serious consequences for labor in the sawmill and planing mill industry (SIC 242) which already faces declining employment opportunities. Forest Sci. 26:471–482.

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