Factor Substitution In U.S. Manufacturing: Does Plant Size Matter

Sang Nguyen and Mary L Streitwieser

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: We use micro data for 10,412 U.S. manufacturing plants to estimate the degrees of factor substitution by industry and by plant size. We find that (1) capital, labor, energy and materials are substitutes in production, and (2) the degrees of substitution among inputs are quite similar across plant sizes in a majority of industries. Two important implications of these findings are that (1) small plants are typically as flexible as large plants in factor substitution; consequently, economic policies such energy conservation policies that result in rising energy prices would not cause negative effects on either large or small U.S. manufacturing plants; and (2) since energy and capital are found to be substitutes; the 1973 energy crisis is unlikely to be a significant factor contributing to the post 1973 productivity slowdown. of Substitution

Keywords: CES; economic; research; micro; data; microdata; chief; economist (search for similar items in EconPapers)
Date: 1998-04
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https://www2.census.gov/ces/wp/1998/CES-WP-98-06.pdf (application/pdf)

Related works:
Journal Article: Factor Substitution in U.S. Manufacturing: Does Plant Size Matter? (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:98-6

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