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Factor shares in the Canadian forest industries, 1957-84 Singh, Ramvir 1988

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FACTOR  SHARES  IN T H E  CANADIAN  FOREST  INDUSTRIES,  1957-84  by RAMVIR INDIAN A.I.F.C., DIPLOMA  IN  INDIAN  REMOTE  A  THESIS  FOREST  FOREST  SENSING,  SERVICE  COLLEGE,  INDIAN  SUBMITTED  THE  SINGH  INSTITUTE  IN  PARTIAL  REQUIREMENTS MASTER  DEHRADUN,  FOR  OF  OF  REMOTE  FULFILMENT  THE  1980 SENSING,  OF  DEGREE  SCIENCE  in  THE  FACULTY  OF  (FACULTY (DEPARTMENT  We  THE  OF  OF  FOREST  accept  this  to  the  GRADUATE  RESOURCES  thesis  OF  Ramvir  as  standard  COLUMBIA  1988  Singh,  MANAGEMENT)  conforming  BRITISH  APRIL, ©  FORESTRY)  required  UNIVERSITY  STUDIES  1988  1983  In  presenting  degree freely  at  this  the  available  copying  of  department publication  of  in  partial  fulfilment  University  of  British  Columbia,  for  this or  thesis  reference  thesis by  for  his  and  scholarly  or  this  thesis  fO  telf  study.  for  her  of  gain  shall  that  agree  may  representatives.  financial  requirements  I agree  I further  purposes  the  that  be  It not  the  of  The University of British Vancouver, Canada  DE-6  (2/88)  f^ES Columbia  O U %C£S  by  understood be  allowed  permission.  Department  Library  permission  granted  is  for  <S><fA/  an  advanced  shall for  the that  without  make  it  extensive  head  of  my  copying  or  my  written  ii ABSTRACT  This study has investigated time-series data from 1957 to 1984 in order to describe the  existing  functional  income  industries and its constituent  distribution  and  sectors viz. logging  (SIC 25), and paper & allied  industries (SIC  in  measured  these  industries  has  trends  been  by  in  industry  27). The relative  the  Canadian  (SIC 04), wood  functional  shares  of  income  factor  forest  industries distribution  inputs:  labour,  durable capital, money capital, materials, energy, taxes, and entrepreneurship.  The  study  has  followed  a  methodology  based  on  an  income  accounting  approach according to which factor incomes were determined on a realization basis. This approach stresses the cost sharing nature of the resulting relative factor shares. The emphasis is on the long-term trends of relative factor shares, real factor prices, and factor productivities, so that the competitiveness of the industries in the use of various factor inputs was discussed.  The  principal  hypothesis  of  this  study  is  that:  relative  factor  shares  in the  forest industries have changed and that the rate of change in a relative factor share is  consistent  and  factor  share  with  the  productivity.  is consistent  principal change  difference  with  hypothesis. in  the  That  relative  is,  the  There  between  rate  of  change  in  real factor  price  observed  rate  of  change  in  a relative  factor  hypothesized  is  share  the  the  only of  one  rate  of  change.  exception,  stumpage  is  not  that  The is  results  the  consistent  support  observed  with  the  the  rate  of  hypothesized  rate of change.  In the profit  have  energy  encouraged and  declined;  have  materials'  forest  industries, and  increased.  price  has  not  technologies  materials  using.  As  the  those  Real  relative  of  durable  labour  price  significantly which  are  a result,  shares  capital, has  changed.  labour labour  of  and  labour, money  stumpage, capital,  taxes,  and  materials,  and  substantially  increased,  These  other  timber  productivity  and saving,  and  and  timber  while  changes capital,  productivity  real have  energy have  iii risen,  and  bles  in  productivities  the  industries  has  been  forest  resulting  bution  in  factor  sectors  differ  functional  compared  and  thsoe  other  inputs in  have  some  declined.  cases  from  Trends the  in various  ones  for  the  variaforest  aggregate.  industries.  prices, with  constitutent  in  The  of  The  factor in  the  the  the  Canadian  this  study  with  in  directions  productivities Canadian  Finnish forest  have  that  income  been  forest  the of in  distribution Canadian  change the  in  the  sector.  industries  been  suggested  Finally, and  some  some  Canadian  relative  industries  manufacturing  industries.  the  manufacturing  forest  has  in  policy  areas  factor are  However, found  for  sector  to  in  and  be  general  research  Finnish  real  factor  agreement  income  different of  industries  the  shares,  functional  implications further  forest  the  from  distrithat  findings  identified.  in of  TABLE  OF  CONTENT  ABSTRACT  ii  LIST O F  TABLES  .  LIST O F  FIGURES  ix  ACKNOWLEDGEMENTS 1.  RESEARCH 1.1  Introduction  1.2  Objectives  2.  1.2.2  Scope  1.4  Main  1  of  the  of  the  of  the  Research  Problem  Problem  2 4  Study  6 6  And  Research  Hypotheses  9  1.4.1  Main  Assumptions  9  1.4.2  Main  Hypothesis  9  Organisation  of Thesis  FRAMEWORK  Theoretical  2.2  Analytical  10 AND  METHODOLOGY  11  Considerations  11  Framework  2.2.1  Tax  2.2.2  Relative  2.2.3  Inter-temporal  Share  13  and  Factor  Entrepreneurial  Income  15  Shares Changes  18 in  Relative  Factor  Shares  Methodology Trends  2.3.2  Problems  Summary  Relevant  of  and  Annual  in the  3.1.2  Wood  Rates  24  Methodology  INDUSTRIES  Literature  Logging  Growth  25  Data utilized  FOREST  3.1.1  19 23  2.3.1  CANADIAN 3.1  Relevance  Assumptions  2.1  2.4  INTRODUCTION  Literature  ANALYTICAL  2.3  3.  Nature  : AN  1 and  1.2.1  Related  1.5  x  PROBLEM  1.3  vi  Review  28 : STATISTICAL  ANALYSIS  31 31  Industry  31  Industries  32  3.1.3 3.2  4.  Paper  Statistical  34  Aggregation  of  output  3.2.2  Aggregation  of  factor  Growth  Trends  3.4  Specific  Research  4.1  Factor Shares  Possible  EMPIRICAL 5.1  5.2  Rates  Incomes  & Prices  of  57 : EMPIRICAL  ANALYSIS  58  in Relative  Factor  and Technical  Shares  Change  59 .  69 70  Results  70  Forest  Industries  5.1.2  Logging  5.1.3  Wood  5.1.4  Paper and Allied  70  Industry  76  industries  80  Comparison  of  Industries  Empirical  Comparison  with  Canadian  5.2.2  Comparison  with  Finnish  RESULTS  6.1  The  Problem  6.2  Summary  6.3  Some  Policy  6.4  Some  Reflections  IN  84  Results with  5.2.1  of  56  : DISCUSSED  5.1.1  EMPIRICAL  Factor  58  Substitution  RESULTS  Interpretation  47  Values,  INDUSTRIES  Growth  Factor  inputs  Hypotheses  FOREST  and  45  in Output  CANADIAN Relative  33  Analysis  3.3  4.3  6.  Industries  3.2.1  4.2 Trends  5.  & Allied  other  Studies  Manufacturing  Forest  Sector  Industries  PERSPECTIVE  88 90 93 95  Addressed  95  Results  95  Implication on  of  the  Findings  Areas  for  Further  98 Research  BIBLIOGRAPHY  99 102  APPENDIX  I: CAPITAL  MEASUREMENT  APPENDIX  II: ADAPTED  APPENDIX  III: EMPIRICAL  APPENDIX  IV: C O M P O S I T I O N  METHOD  DATA  109 112  RESULTS OF  127 FACTOR  INPUTS  150  vi LIST O F  Table  3.1: The  Table  3.2:  and Their  Computed  Annual Prices,  Growth  for  Rates  in  Standardizing Nominal  Data  Values  of  in the  Logging  Output,  Factor  Industry  4.1: Average  Table  4.2:  Table  4.3: The  56  Relative  Factor  Industries:  Constituent  Shares  Trends  in the  Parameter  Indusries: Trend  Forest  Industries,  estimates  Parameters  and  1957-84  Summary  estimates  Statistics  and  4.4:  Annual  Prices  and  Factor  Table  4.5: Annual  Growth  Prices  and  Productivities  Table  4.6:  industries  Factor Possible and  4.7:  Industries  and  5.2:  Annual  Annual  Variables  11.1: Output  Industries,  Growth  Rates  Productivities  (%/a)  Rates  Industry,  Factor  Substitution  Paper & Allied  Growth in the  the  in the Values,  Change  Real  Factor  1957-84 in  the  66 forest 67  Forest  Forest  Industries, Factor  Manufacturing Relative  Wood  Shares  Factor  Price  and  1957-84  Industries,  Industries, &  in the  68  Canadian  Relative  Indexes,  Change  1957-84  in the  of  Forest  Output  65  Shares,  Industries,  and Technical  (%/a) of  Finnish  Factor  1957-84  (%/a)  Rates  Real  1957-84  Factor  and Technical  Shares  and  Shares,  Industries,  Constituent  Finnish  Rates  Factor  Relative  Industries,  Factor  Forest  Growth  Forest  in the  Logging  and  Relative  (%/a) of  Substitution  Relative  of  in the  Factor  Industries,  Variables  5.3:  Relevant Table  the  5.1: Average  Relevant Table  the  Possible  Manufacturing Table  59  64  Table  Table  58  Summary  Statistics  Table  43  Inputs  1957-84  Table  Forest  Ratios  TABLES  89  and  Other  1957-84  Shares  and  91 Other  1955-83  93  Indexes  for  the  Forest  1957-84  112  Table  II.2: Factor  Price  Indexes  in the  Table  II.3: Factor  Prices  Indexes  in  the  Logging  Table  II.4: Factor  Prices  Indexes  in  the  Wood  Table  II.5: Factor  Prices  Indexes  in  the  Paper & Allied  Table  II.6: Factor  Incomes  in the  Forest  Forest  Industries,  1957-84  114  Industry,  1957-84  115  Industries,  1957-84  116  Industries,  Industries,  1957-84  1957-84  117 118  Table  11.7: Factor  Incomes  in the  Logging  Table  II.8: Factor  Incomes  in the  Wood  Table  11.9: Factor  Incomes  in  Paper  Table  11.10: Indexes  of  Factor  Quantities  in  the  Forest  Table  11.11: Indexes  of  Factor  Quantities  in  the  Logging  Table  11.12: Indexes  of  Factor  Quantities  in  the  Wood  Table  II.13: Indexes  of  Factor  Quantities  in  the  Paper  Industries, Table and  the  Industry,  1957-84  Industries,  1957-84  & Allied  Nominal  Growth  Prices  Rates  in the  in  Nominal  Constituent  Values  Industries,  Table  111.1: Relative  Factor  Shares  in the  Forest  Table  111.2: Relative  Factor  Shares  in the  Logging  Table  111.3: Relative  Factor  Shares  in the W o o d  Table  111.4: Relative  Factor  Shares  in the  Table  III.5: The  and  and  and  Real  Factor Table  Industry:  Growth  Rates  Industries:  Growth  Rates  for Annual  Prices,  III.9: The  Statistics  Rates  Paper & Allied  Statistics  Factor  Table  Industry,  1957-84  Industries,  1957-84  &  Allied  Paper  Regression in  of  Factor  Incomes  1957-84  Industries,  1957-84  Industry,  1957-84  Industries,  1957-84  & Allied  Parameter  Relative  Output,  Industries, Estimates  Factor Shares,  1957-84  and  Real  Summary  Factor  Prices  Regression in  Parameter  Relative  Estimates  Factor Shares,  and  Real  Summary  Factor  Prices,  Regression in  Parameter  Relative  Factor  Estimates  Shares,  and  Real  Summary  Factor  Prices,  Productivities  III.8: The  Summary  Growth  Wood  for Annual  Factor  Table  1957-84  Productivities  III.7: The  Statistics  Industries:  Logging  for Annual  Factor  Table  Industries,  Productivities  III.6: The  Statistics  Forest  for Annual  Factor  Table  1957-84  1957-84  11.14: Annual  Statistics  Industries,  Forest  for Annual  Prices,  and  111.10: The  and  Industries: Growth  Factor  Rates  in  Parameter  Relative  Factor  Estimates  and  Shares,  Productivities  Industries:  Growth  Regression  Rates  Regression in  Ratios  Parameter of  Relative  Estimates Factor  and  Summary  Shares,  Factor-Factor Logging  Industry:  Regression  Parameter  Estimates  and  Summary  viii  Statistics  for Annual  Prices  and  Table  111.11: The  Statistics Prices, Table  Factor  Rates  in  Ratios  of  Relative  Factor  Shares,  Factor  Factor-Factor Wood  for Annual  and  140 Industries:  Growth  Rates  Regression in  Ratios  Parameter of  Relative  Estimates Factor  and  Shares,  Summary Factor  Factor-Factor  111.12: The  Summary  Growth  Statistics  Prices,  and  Paper  142 & Allied  for Annual  Industries:  Growth  Factor-Factor.  Rates  Regression in  Ratios  Parameter of  Relative  Estimates Factor  and  Shares, 144  ix  LIST O F  Figure  2.1:  Demand  Figure  2.2:  Indifference  Components  of  and  Supply Curve  a Factor  FIGURES  Schedules  Analysis  for  for  Factor  Inputs  Entrepreneurial  and  17  3.1:  Indexes  of  Output  Values  Figure  3.2:  Indexes  of  Output  of  Figure  3.3:  Indexes  of  Output  Prices  Figure  3.4:  Indexes  of  Factor  Prices  Figure  3.5:  Indexes  of  Factor  Figure  3.6:  Indexes  of  Figure  3.7:  Indexes  Figure  3.8:  Figure  3.9:  Figure  3.10:  Indexes  of  Factor  Incomes  in the  Paper  Figure  3.11:  Indexes  of  Factor  Incomes  in the  Forest  Figure  3.12:  Indexes  of  Factor  Quantities  in the  Logging  Figure  3.13:  Indexes  of  Factor  Quantities  in the  Wood  Figure  3.14:  Indexes  of  Factor  Quantities  in the  Paper  Figure  3.15:  Indexes  of  Factor  Quantities  in the  Forest  Figure  4.1:  Relative  Factor  Shares  in the  Logging  Figure  4.2:  Relative  Factor  Shares  in the  Wood  Figure  4.3:  Relative  Factor  Shares  in  Paper & Allied  Figure  4.4:  Relative  Factor  Shares  in the  Forest  Industries,  Figure  111.1: Deviations  Relative  Factor  Shares  from  Forest  Industries,  Figure  III.2: Deviations  of  the  the  Forest  Forest  Industries,  Industries,  35  1957-84  36  Industries,  in the  Logging  Industry,  1957-84  38  Prices  in the  Wood  Industries,  1957-84  39  Factor  Prices  in the  Paper  of  Factor  Prices  in the  Forest  Indexes  of  Factor  Incomes  in the  Logging  Indexes  of  Factor  Incomes  in the  Wood  of  in the  1957-84  Forest  Industry,  the  & Allied  1957-84  Industries,  Industries,  37  1957-84  1957-84  Industries,  of  1957-84  42  Industries,  1957-84  49  & Allied  Industries  50  Industries,  1957-84  51  Industry,  1957-84  52  Industries,  1957-84  53  & Allied  Industries  Industries,  Industries, Industries,  1957-84  55  1957-84  60  1957-84  Industries,  Their  54  61 1957-84  62  1957-84 Means  63 in  the 146  Relative  Factor  Shares  from  Their Means  in  the  1957-84  III.3: Deviations  Wood  Industries,  Figure  III.4: Deviations  of  147 Relative  Factor  Shares  from  Their Means  in  the  1957-84  Industries,  of  40 41  1957-84  Figure  & Allied  Contractual  Input  Figure  Logging  12  148 Relative  1957-84  Factor  Shares  from  Their Means  in  the  Paper 149  ACKNOWLEDGEMENT  I gratefully  acknowledge  My  greatest  continuous project  give  guidance,  am  me  in  interest  grateful  the  in  my  beyond  I am for  their  British  is  to  and  work  the  those  Dr.  and  was  thankful  continuous  other  efforts.  who  have  David  Haley,  and  support.  to  members  Dr.  thus  very  immediate  Columbia.  to  of  made  my  this  thesis  research  It  is  he  possible.  supervisor, who  for  his  suggested  this  scope.  project  my  efforts  encouragement its  their time  inherent  look  debt  and defined  I  the  Peter  Dr.  J.W.  are  also  Dr.  Wilson,  Dr.  less  J.H.G.  me  always my  my  John  G.  consented  of  the  to  problems  His  continued  encouraged  me  to  horizon.  Smith  during  Dr.  who  frustrating.  Tait  broaden  support to  forewarned  David  helped  due  committee,  impact  and  and  my  Pearse  their  supportive.  encouragement  Thanks  H.  made  concerns  of  and stay  Dr. in the  Cragg  for  Jack  Thirgood  University his  of  valuable  suggestions.  I  am  grateful  Administration  I am and  the  for  providing  also  grateful  Principal  opportunity.  I am  Corporation,  who  I Jeanette  Leitch, to  the  to  Rahul  importance  me  to  also C. this  the  and of  to  Schadendorf,  this  Varun, this  to  who  effort.  for  Government  Mr.  of  M.C.  express Basivi  my  Das,  my  created  India;  ways  IFS,  my  and  Mrs.  have  for  smiles  to  econometric  my  colleagues  Savithri  made  and  did  of  providing  Director,  provided  who  studies.  Government  Orissa  to  and  Manjul,  many  the  interest  Scholarship/Fellowship higher  Managing  thanks  Reddy,  wife,  of  pursuing  Forests,  in directing  in numerous  work  Commonwealth  financial support  to  like  thesis  Canadian  Conservator  thankful  I dedicate and  Chief  the  is instrumental  would  contributed  to  most not  me  Orissa  this Forest  studies.  M.  Devadas the  Orissa;  Luckert,  who  have  needed  support.  of  sacrifices  let  the me  exagerate  1.  1.1  PROBLEM  : AN  INTRODUCTION  INTRODUCTION  Income 'production that  is an important  process'  produce  occupy are  and  concerned into  optimum  put  which  or  simply  the  mix  will  the  place  with  determinant  theories  in the  distributed  goods  and  discipline  services  of resources,  'factors'  their  processes  or inputs,  These  and are traditionally  and  the  'distribution Theories  Firms  to produce  inputs  economic  of the firms  by society.  in order  It is created  amongst  of economics.  desired  profits.  welfare.  of 'production'  the decision-making  maximize  of social  is simultaneously  it. Therefore,  an important  resources an  RESEARCH  are  classified  called  in the agents  of income'  of production  which  transform  in an industry that  amount  'factors  as: labour,  use  of out-  of production'  land,  capital and  entrepreneurship.  Theories of  the  factors  value  salaries  receives Such  of gross  as a payment  production, ing  of 'income  each  factor  &  other  interest;  a distribution  income economic  and  output  1  (Pen,  are  ( or that  t o them receives  for  a certain  the  residual  This  income  use  of their  share.  Thus,  t o the  various  concerned  added)  land-based  goes  amongst  primarily  of value  the  compensations);  of income  distribution' . process  distribution'  distribution  among services,  labour  resources entrepreneur  production  with  the  distribution  various  production  in the  receives  wages (includ-  receive in the  factors  rent; capital form  is called  is the outcome  process of  of  profit.  'functional  of an intricate  1971).  Another notion of 'income distribution' is 'personal income distribution' which means distribution of national income amongst various individuals (Craven, 1979). Personal income distribution is a function of factor ownership and prevailing factor prices. This concept has grown with concern for the alleviation of poverty and the stimulation of growth in the less developed countries (lohnson, 1973). This study focuses on the functional income distribution which has a bearing on the personal income distribution (Denison, 1954). In this respect, distribution theory is closely related t o welfare economics (Craven, 1979; Ferguson, 1969). It is, therefore, highly relevant from the point of view of public policy. 1  1.2  OBJECTIVES  In  (2)  the  (1)  to  how  how  questions  RELEVANCE  analyzing  addressed: and  AND  to  have  have  described  This  is  still  problem separate  explain  always them  an  OF  the  important  of  RESEARCH  income  the  shares  shares  remained as the  THE  earned  issues  'principal problem  distribution,  earned  key  by  in  by  two  various  each  in  is  yet  to  of  ln  a political be  questions factors  factor  economics,  problem'  which  PROBLEM  must  of  production;  production.  fact,  some  economy  finally  be  These  economists  (Sraffa,  settled  1960).  (Samuelson,  1980).  Recently, of  specific  attempts  industries  income  distribution  Morgan  (1983)  examined try.  To  sector  the  in  however,  Canadian  amongst  in  (Johnson,  1.  of  changes  helping  Finnish the  changing no  to  determine  Ovaskainen forest  coal  energy  prices  studies  of  this  how  (1986)  industry  Western  therefore,  the  has  from  1955  to  in  on  economic  the  have  value  of  described  industry  type  investigates  industries  from  1957  reasons.  First,  such  various  changes  issues  study,  forest  number  plain  made  Mutti  U.S.  rent  addressed  functional  1983.  Wyoming,  the  output  and  in  have  the  forest  &  indusindustry  Canada.  This  a  the  of  been  distributed.  studied  effect  date,  is  in  have  have  production  in  factors  industrial  input-use  over  1984.  studies  in  Third,  It  in  terms such  is  income an  a  of  the  given  research  distribution  industry.  changes  studies  distribution  important  describe  employed  structure time.  to  functional  in  a basis  also  has  the  topic  for  of  income  Second,  the  form  in  they  ex-  product-mix  for  growth  and  models  1973).  This  study  to  address  of  the  some  Canadian current  forest  policy  industries  problems.  It may  immediate  provide  relevance  insights  into  process,  it  in  such  as: How  relative  When  more  explicitly  factor than  known  shares one  how  have  factor relative  is  changed  over  employed  shares  of  in  each  time. a  production  factor  change  over  time.  is  not  In fact,  inter-temporal ables  including  amongst 2.  How  various  real factor  have  put,  real  factor  Factor  above.  is, the  produced  Studies follows.  This  Are  at  least  however,  factors  production  This  and  much  minimum  as  output unit  real  &  in  an  may  which  considered  by  prices,  corollary  total  factor  Changes  the  cause  in  level  of  in-  factor output  1986).  extended  industry  be  a factor.  factor  to  these  variables  divided  of  Nautiyal,  deal with  in earn  payment  to  the  competitive  and  factors  be  only  can  If it  then  time.  further  it  cost.  will  (Singh  be  retained  opportunity  factor  over  in  substitution  examine  issues  earning  other  issues  as  superficially:  returns  equivalent  to  their  be  paid  cost?  employed as  issue  one  changes  of  of vari-  output.  same  this  to  may  of  fact,  a number  elasticity  and  by the  attributable by  upon  time.  total  such  this  over  factors  as  changes  as  input  changed  and technical  opportunity be  affected  depend  technology,  defined  study will,  all  To  output  are  ln  have be  shares  are influenced  mentioned  may  of  changed  shares,  productivity  that  prices  prices  productivities  factor  production  factor  productivities  1.  prices  in  How  in and  changes  one  relative  factors  in real factor  the  in  changes  Changes  to 3.  changes  be  paid  equal  to  is  its  factor that  priced  as much  forest  in  assumed are  the  the  industries,  best  possible  is  called  factor  and  according  quantity  of  factor  its  their  cost.  employment.  transfer  earnings  markets  are  marginal  Ideally,  employed  must  alternative  output  to  as its opportunity  a factor  multiplied  perfectly  product,  a factor by  or  each  share will  its  marginal  product. 2.  Are A  factors payment  and  is  made  called  its price factor  earning  factor  in  'economic  rent'.  For  earn  to  'economic  a  is solely  may  some  determined more  than  rent'?  excess  example,  by the its  of  if  demand  opportunity  its  opportunity  the for  cost.  supply  of  it.  In such  This  excess  cost  is  a  a factor  surplus is  fixed,  a circumstance, income  earned  a by  the  factor  may  Is stumpage  3.  Stumpage forest  or  the  economic  rent,  industries,  is  NATURE  divided  investigate  two  Pf  and  are  quantities  of  the  factor,  its  quantity by  of (i)  any  anomalies  Pq  are  the  factor  of  factor Pf  x  for  economic  is  an  Crown  this  which  gross  gross  output.  the  ratio  nominal  lem  of  factor  rent is  of  in  a  rent?  important  timber  is  is  captured  charge equal  by  considerable  is  also  progress;  and be  on  to  the  its  forest  significance  in  share  this  by  productivities  and  output,  in  may  the  observed  be  industry  trends  respectively,  then  the  price  of  the  may  then  be  defined  x  F)/(Pq  definition, output  and  Q))  that to  such degree  the  as of  as 'factor  price  F & share  multiplied  where  is,  and  absolute  factor  real factor  mainly  the  x  price,  variables  and  explain  produced,  reduces  other  distribution  as  (Pf  nominal  industry  distribution.  output  Following  therefore,  (ii)  factor  ( i.e.  to  and  defined  factor  influenced  factor  a  particular  income  income  output  price  distribution,  any;  for  may  Relative  existing  in the  prices  share,  F).  if  employed  of  technical  part  the  anomalies,  is the value  it  paid  distribution  describe  of  But  its true  timber  price  issue  income  value  pricing.  a  of  or  income  to  PROBLEM  the  of  equal  standing  the  controversial  and  of  (i.e.  for  whether  parts:  trends  Q  divided  or  THE  causes  If  Crown  payment  investigation  observe  by the  rent.  policy.  OF  into  as economic  Whether  a  forest  The  and  charged  industries.  public  1.2.1  be viewed  share'  ( Pq  x  Q  is defined  (Pf/Pq). The problem  production  of  by  ) as  probfactor  technology;  substitution  between  factors.  The the  factor  (i.e.  the  price and  its  demand  production  of  of  a  supply.  for  which  factor  The  a factor the  is  the  result  demand  is derived  factor  is  of  for from  required).  interaction  a  factor  is  the  demand  Also,  factor  between usually for  a  the  demand  derived  'final' output,  demands  in  the  for  demand for  the  Canadian  forest  industries  input  creates  Nautiyal, the  1986).  different  the  by  solved  ( or  to  This  measured,  as  Refer  demand  in  for  depends,  factors;  approaches 'general  'general  inter-alia,  degree  of  Similarly,  the  supply  such  as  the  (e.g.  the  other  the  cartels  Lydall,  of  given  demand  inputs  upon  (  the  for  an  Singh  &  price  of  substitutability of  a  demand  labour  to  (1967)  could the  or be  amongst  factor  for  unions  called  chapter  2  the  is  also  factor  etc.);  the  function  or  and  by  other  'social  from  the  (jorgenson that  of  from the  estimating  shifts  underlying it.  This  in detail  in  can  be  'production  the  factors  relationship  employed  cost  function  be-  by is  the then  shares'.  or  'income  accounting'  and  been  1967; and  the  study next  has  Ovaskainen,  inputs  were  movement production  production  the  which  an aggregate  purposes, in  problem  distribution  approach  output  accounting  separated  or  Griliches,  the  The  income  aggregate  second  if  theory  for  accounting'  &  approach,  describes  factor  distribution.  industry.  of  inputs  'relative  the  regional  a given  which  and  theorised  price  specification  and  income  macro-model  function')  is explained  2.  to  of  In this  general  a  involves  properties  which  of  use  'cost  derived  specifically  approach  2,  is  analysis'.  analysis'  prices'  researchers  of  without  section  is  determination  part  industry  'real factor  national  some  is  production  approach  for  a  equilibirium  aggregate  approach  the  equilibrium  1979). This  the  Griliches  to  as  approach  function  words,  accounting'  the  factor  resource  considered  empirical &  captured  a disequilibirium  considerations  of  aggregate  third  Jorgenson  2  is  estimate  several  production  a  in  productivity.  of  of  its dual  The  approach.  other  that  output  The  by  is  1980;  the  analyzed  for  other  factor  three  second  (Ferguson,  industry.  of  number  applying  The  tween  and  pricing  by  function'  prices  i.e.  adjustments  demand  existence  are  approach factor  interrelated,  constraints.  There  of  a  industries;  institutional  first  Thus,  factors;  influenced  actually  compensating  output;  other  are  chapter.  1986).  accurately along  function.  function  employs  used  the  could  the In be  'income  6  1.2.2  SCOPE  OF  This  study  income  The  investigate  and  the  Canadian  the  constituent  study will  STUDY  will  distributions  forest  data  from  1957  to  1984  to  describe  in:  3  0  of  the  forest  industries.  also:  observe  trends  prices  and  and  anamolies  relative in  factor  real  factor  shares; prices  and  relative  factor  shares  time;  compare  the  compare  the  industries  with  Labour, considered  results  RELATED  those  be  trends  Ovaskainen  in  functional  supplies',  considered  in  the  will  be  (1986);  and  income  distribution  in  the  forest  manufacturing.  entrepreneurship,  production &  of  in all Canadian  capital,  of  'materials  share will also  with those  observed  durable  factors  in  The  series  industries .  sectors  real factor  included  time  their trends  estimate  over  1.3  THE  forest  materials industries.  considered  as a separate  factor  &  supplies,  Timber,  and  which  as a separate  energy is  factor  are  generally input.  Tax  input.  LITERATURE  literature  is  replete  attendant  controversies.  The  however,  the  of  mainstay-  with  marginal most  of  various  theories  productivity the  empirical  5  theory  of of  research  income income in  this  distribution  and  distribution field.  is,  Ferguson  For the purpose of this study, the forest industries are comprised of the Logging Industry (SIC 04); W o o d Industry (SIC 25) and Paper & Allied Industry (SIC 27) where SIC refers to standard industrial classification as per Standard Industrial Classification C o d e , 1980: Statistics Canada Cat. No. 12-004. 3  "viz. (SIC  Logging  lndustry(SIC  04); W o o d  Industry  (SIC  25) &  Paper & Allied  Industries  27)  A d a m Smith (1776), Ricardo (1951-73), Marx (1867), Clark (1902), Marshal (1920), Hicks (1932), Douglas (1934), Kalecki (1942), Kaldor (1955), Robinson (1960), Pasinetti (1962) and Lydall (1979) all have contributed to the theory of income distribution. D o b b (1973) has surveyed all these theories. Some of these theories have been discussed in Bronfenbrenner (1971), Craven (1979), Johnson (1973) and Lydall (1979). 5  7  (1969),  Bronfenbrenner  expounded  this  Various The  (1971),  of  theoretical Two  an  observation  constant  over  reported  notion  also  expressed study  changed the  The  that  of  in  them  of  his  Could  and  that  and  monopolies  reap  that  the  Ferguson  (1980)  concerns  distribution,  in fact,  (Pen,  still presents  in  have  many  cost  shares  price  the  share  constancy in  To  of  of  be  above  open  and  role  its  other  factor  number  of  shares  remain  and  others  concluded  factor  shares.  is  is  industries  have  consistent  with  productivity . 8  and  institutional  generally  contribution  The  that  relative  power'  marginal  to  (1958)  factor  it  from  Solow  share  specific,  of  false.  forest  'social  stems  (1954)  was  partial  factors.  a  (1959)  the  factor  6  controversy  Kravis  shares  investigated .  forth  Johnson  a relative  1971).  at the  factor  factor  first  relative  time.  reported  real factor  labour's  profits  over  relative  the  The  of  empirically  brought  example,  shares  change  between  raise  heavy  For  relative  controversy  to  1973).  about  distribution  tend  tendency  been  has  here.  the  in  have  literature  mention  factor  skepticism  second  unions  about  7  constancy  differential  income  deserve  relative  long-run  time  in  and  distribution  empirical  (Johnson,  hypothesizes  over  change  factors  time  constancy  the  This  of  income and  controversies. apparent  (1973)  theory.  aspects  growing  Johnson  problem  believed and  of  that  income  questions.  Notable empirical studies are: Johnson (1954), who investigated functional income distribution in U.S. economy from 1850 to 1952 and reported constancy of labour share during 1850-1900 and variablity of that share during 1900-1952; Kravis (1959) w h o studied functional income distribution in U.S. e c o n o m y during 1900-1957, observed a shift in the distribution in income from property to labour and concluded that the notion of long-run constancy in relative factor shares is false. Solow (1959) also expressed his skepticism about the reported constancy of relative factor shares; Levinson (1954) and Simler (1961) investigated the impact of unoinism on income distribution; Hashimi (1960) studied the impact of inflation on income distribution in U.S. economy during 1929-1957; Denison (1967); Ferguson (1968) and Kendrick & Sato (1963) examined the impact of growth and technical progress on relative factor shares. 6  7  8  See  footnote  This  will be  6. shown  in chapter  2.  Explaining difficult the in  than  that  nascent the  time.  in  hypotheses  has  this  with  yet  the  which  is  and  also  in per  reported that  into  the  in  increase in  the  technical  hypothesis  of  in  for  these  used  that all  state  this  in the  is far  direction  is  income  the share  of  still  in  share,  profit  of  more  distribution  labour  specification  &  wood  in  the  of  labour  capital,  factor three  wood  a  over  9  research  industries.  These  material paper  change  and  thesis  in  allied  &  will  have  all  three  industries.  is  an  capital  factor  and  (1986)  increase  lumber  Martinello of  in  change  Nautiyal  and  the  (1986),  technical  Canadian  independent  Nautiyal  which  energy  in the  This  &  Singh  in  change, studies  using  and  sector  particular  technical  Singh  unobservable. are  in  negative  industries.  was  shares  and  and  productivity  progress  and  technical  three  of 1 0  and  industries,  industries  examined .  factors  positive  rates  (1983)  capital  forest  technology,  and  Preston  all  the of  factors  and  using  in  empirically  reported  annum  that  Ovaskainen (1986) enterpreneurship. 9  an e c o n o m y  functional  trend  for  between  productivities  rejected  some  Rao  saving  material  2.9%  overwhelmingly insight  labour  the  been  substitution  (1983)  of  reported  for  of  Preston  the  the  slight  distribution  various  have  &  decreases  basis  studied,  industries,  observed  They  been  logging  saving  rate  the  viz.  Rao  studied a  of  Research  perceptible  income  exception  generally  industries,  who  no  form  industries  possibilities  a whole.  sector  study.  not  these  as  observed  and  functional  limited  labour  industry share  in a specific  (1986)  possibilities - between  of  observed,  Ovaskainen  forest  Although  some  economy  observations  of  substitution  distribution  the  stumpage  These  Canada  in  stage.  Finnish  decrease  income  at  industry.  (1985)  also  prices  was  provide  a  fresh  observations.  the  term  profit for  the  share  of  capital  and  S o m e notable studies are: W o o d l a n d (1975), Rao & Preston (1983), Banskota & Phillip (1985), and Martinello (1985) studied the Canadian logging industry; Rao & Preston (1983), Martinello (1985), and Singh & Nautiyal (1986) studied the Canadian lumber industry; and Rao & Preston (1983), Sherif (1983), Martinello (1985), and Singh & Nautiyal (1986) empirically investigated the Canadian paper & allied industries or part thereof; and Martinello (1984) & Constantino (1986) examined lumber industry in B.C. 1 0  9  1.4  MAIN  ASSUMPTIONS  Real  world  completely. models  economic  It is, therefore,  incorporating requires  which  commonly  are  1.4.1  MAIN  essential  are to  in  complex  and  reduce  these  complex  features  assumptions.  found  too  the  This  and  discarding  thesis  employs  relevant  literature  difficult  to  be  problems  into  undesirable the  1973;  simple  details.  following  (Johnson,  analyzed  This  assumptions  Ferguson  and  ASSUMPTIONS  The  aggregate  The  forest  The  factors  The  to  forest  The  The  output  industries  be  of  the  face  - labour,  forest  industries  a competitive  durable  capital,  is assumed  product  materials  to  be  homogeneous.  market. &  supplies,  energy  etc,-  are  as-  homogeneous.  industries  aggregate  exihibiting  The  problems  HYPOTHESES  1980).  sumed  1.4.2  heroic  RESEARCH  necessary  their  sometimes  Gould,  AND  also  face  production  constant  aggregate  function  returns  to  production  twice  differentiable.  Firms  in the  forest  MAIN  HYPOTHESIS  principal  hypothesis  this  is  factor  markets.  assumed  to  be  linearly  homogeneous  scale.  function  industsries  of  competitive  are  study  is  further  assumed  assumed  to  be  to  profit  be  continuous  and  maximizers.  is that:  the relative shares of the various factors of production in the forest industries have changed over time and that the change in a relative factor share is consistent with the change in the differential between real factor price and partial factor productivity.  Specific  hypotheses  developed  in  about  Chapter  3.  relative  shares  and  real  prices  of  individual  factors  will  be  1.5  ORGANISATION  Chapter methodology framework,  to  The  this  be  of  explained.  of  empirical  results  summarized  In hypotheses  specific  and  the  Canadian  the  results  factor  of  about  the  in this  5,  for  the  framework In  for  and  developing  proposed  basis  the  with  are  the  study  explains the  are  principal  sector.  the  analytical  identified  hypothesis  to  and be  of  industries.  short-comings  output  and  changes  In this in  factor in  chapter,  the  data  inputs  relative  is  are  briefly  shares  and  elaborated.  industries  is  and  empirical  discussed  given each  in of  results  are  the  light  in  results  of  Finally,  Chapter  recommendations  forest  expected  industries  These  the  the  important  about  forest  are  of  aggregation  inputs  forest  results  compared  some  the  chapter.  manufacturing  and  in the  analysis  hypotheses  analysis  Chapter  provides  analytical chapters.  inherent  reviewed;  procedure  individual  Empirical  subsequent  statistical  briefly  the  Finally,  real prices  also  the  chapters.  is  and  in  develops  problems  includes  3  literature  highlighted;  study  used  in subsequent  relevant  THESIS  framework  Chapter  are  of  a number  discussed. tested  2  OF  Ovaskainen  for further  6  Chapter the  the  (1986)  concludes  research.  The  constituent  detailed  of  4.  relevant industries  in Appendix 111.  specific  and with  with  research those  a summary  for of  11  2. ANALYTICAL  2.1  THEORETICAL  This how to  to  how some  focuses  determine  to of  industries,  and  trends  the  on  relative  trends  use  AND  METHODOLOGY  CONSIDERATIONS  chapter  discern  FRAMEWORK  three  factor  as  in  in  changes  changes  in  questions in  the  anomalies  inter-temporal  such  shares  anomalies  and  key  this  thesis  the  Canadian  relative  factor  the in  relative the  factor-mix,  forest  factor  that  industries;  shares  structure  factor  addresses,  over  of  the  productivities  (ii)  time;  shares/prices  is: (i)  and  to  (iii)  explain  Canadian and  how  forest  technological  change.  Underlying order  to  factors  maximize  of  Timber  the  output  ered  of  a factor  Factor forest  demand price,  on  of  profits, labour  or (Q) . 1  the  firms (L),  methodology  in  the  durable  fuel  (F),  and  Firms  also  pay  forest  capital  is  the  industries  (K),  (tax)  hire  materials  entrepreneurship taxes  assumption  which  that  in  homogeneous  &  supplies  (E)  to  may  also  (M),  produce  a  be  consid-  for  factors  production . 2  shares  industries for  -  energy  homogeneous  by  their  production  (TR),  formulation  a  factor  the  price  and and is of  relative the a  factor  supply  derived output;  of  shares the  demand the  price  depend  factors and of  on  the  available  depends, other  to in  factors;  demand these  addition and  industries. to the  the  The  factor  degree  of  Recall our assumptions of homogeneity in section 1.4.1 of chapter 1. The symbols L, K, M, TR and F represent both - homogeneous factors of production and their quantities. Similarly, symbol Q represent homogeneous output. The term 'materials & supplies', as used here, does not include timber, that is, M is net of TR. The term 'materials & supplies' is hereafter shortened to 'materials'. 1  T a x e s are justified in a number of ways, two of which need be mentioned here. According to one view, taxes are considered a part of an 'economic surplus' to which society has a right to a portion. In this view, taxes are only a part of pure 'profit'. The second approach is to view taxes as a price for governmental services. In this thesis, the second approach is accepted. Government services are: considered essential for 'production'; hired by the firms; and paid for in the form of taxes. In other words, taxes have been considered a factor of production for the purpose of this study. 2  12  substitutability  between  technology.  industry  ( DD'  An  in figure  The  resource annual  of  such  cartels  (e.g. cut  usually  faces  The  price  the  result  of  to  that  factor  price  generates  factor  the  (AAC) a  interaction  multiplied  an  as  dictated  a negatively  the  between The  factor  by the  the  and  restrictions  and  industry  on  unions);  positively  (Pf)  industry.  to  demand  labour  a factor  of  factor  a  as  allowable  industry  usually  factors  by  available  sloping  factor  production  demand  curve  2.1).  supply  considerations  different  factor the  quantity  other by  of  influenced  by  other  institutional the  factor  forest  supply  quantity  demand  share,  also  factor  faced  sloping  is  constraints, industries  curve  the  a  industries;  (F) employed  for  by  factor  or  factor  income,  is  the  factor  employed,  (  SS'  then that  of  existence  of  for  example,  in  Canada.  in  figure  by the and  number  industry,  An 2.1). are  supply  of  the  defined  as  the  is, (Pf.F).  quantity  FIGURE  (VMP)  2.1  : Demand  A  profit-maximizing  of  each  factor  and  entrepreneur  employed  to  Supply  schedules  equates  its price  the  (Gould  for  value &  factor  of  Ferguson,  the  inputs  marginal  1980) . 3  This  product implies  This is true only under the condition of perfectly competitive product and factor markets. If the product market is imperfect, a profit-maximizing enterpreneur will employ that quantity of a variable factor at which the marginal revenue product of the factor equals its price. This study employs the assumptions of the perfectly competitive product and factor markets faced by the forest industries in Canada. 3  13  that  if  the  aggregate  production  function  of  and  factor  quantities  employed  can  imputed.  relative  factor  &  entering  the  accounting  prices,  production  used  this  U.S.  theorised  function marginal  ratios';  the  known,  Consequently,  are  then  in  (i)  if  the  factor  factor  quantities  accurately of  prices  shares  and  output  and  estimating explaining  as  substitution  data  may  of  measured,  technical  employing  function  explicitly  approach  that:  rates  production  without  'social-accounting'  factor if  may  this  inputs  output  exactly  identity'  which  production  Let  the  prices  can  be to  address  FRAMEWORK  =  between  f(L,  K,  is  the  theorised  are  correctly the  the  on  be  are  both  changes  in  that:  if  identified  from  production  social  quantities  separated  the  for  and  shifts  function.  productivity  in  They in  the  M,  function  questions  are  determined;  relevant without  (i)  factor  this  accurately  then  inputs  explicitly thesis  quantities  the  output  measured;  value  establishing  estimating  of  of an  the  and  output 'income  underlying  raises.  5  production the  here  production  employed,  aggregate  relationship  Q  input  into  it  distributed-amongst  function,  ANALYTICAL  approach,  entering  and  be  the  price  along  is  economy.  and  2.2  (1967)  (ii) if  function  Following  (ii)  and  industry  determined.  production  corresponding  movements  be  Griliches  purposes;  the  the  can  Jorgenson inputs  with  shares  be  an  output  TR,  function (Q)  and  of the  a  forest  factors  of  industry,  which  production  F)  6  describes  be:  (1)  T o maximize output subject to a given total cost, that is to maximize profit, an entrepreneur must purchase inputs in quantities such that the marginal rate of technical substitution of one factor for another factor is equal to the ratio of price of one factor to that of the other (Could & Ferguson, 1980). 4  5  This  section  is based  primarily  on  Could  &  Ferguson  (1980).  For the moment, we ignore factors, entrepreneurship (E) and taxes not explicitly enter into the aggregate production function. 6  (tax) which  do  14  In this expression, be  the marginal  and so on. Then  dQ  Substituting  coefficient  + f .dK  dL/L =  (3) into  f .dM M  (2), multiplying  =  L  tion  relative  by e and equation  the  first problem  L  will  of  capital  (2)  p  (3)  and dividing  it by X Q , we get:  + f^.M + f F  (4)  p  shows  the relative  in all factors. function  M  + f .TR  This  change is called  (Could  in output  Q  the function  & Ferguson,  + f F.  T R  is now encountered:  total  returns  which change  K  product  7  if each  be completely  if,  to s c a l e .  p be the price  e = 1, This  of output  1980). It  that  is what  (5)  factor  is paid  exhausted?  Equation  is, the aggregate is assumed  according  (5) suggests  production  in this  to its  function  model  (see sec-  Q . Substituting  e = 1 and multiplying  (5) by p,  (5) can be rewritten as:  =  (p.f ).L L  +  (p.f ).K K  Recall that a profit-maximizing  This  product  Chapter 1.).  equation  p.Q  Let 5f/6L=f^  (4) can be written- as:  The  Let  X, then:  of the production  = f .L + f .K + f  1.4.1,  proportion  T R  dQ/XQ,  to the same  constant  + f dF  TR  (2) by Q  K  that this will b e so if, and only exhibits  the marginal  + f .dTR  f .L + f .K + f .TR  the term  product,  be  K  meanings.  dK/K = dM/M = dF/F = dTR/TR  Qe  marginal  preassigned  (1), we have:  by the same  or the elasticity  is denoted  +  K  are increased  Consider  6f/5K = f  of labour;  totally differentiating  L  Q.dQ/(XQ)  attributable  product  = f .dL  If all factors  X=  Q , L, K, M, TR, and F have  is called  the 'adding-up  +  <p.f ).M M  entrepreneur  theorem'  +  (p.f ).TR TR  + (p.f ).F  employs. a variable  F  (6)  factor to the point at  and is due to Euler (Johnson,  1973).  15  which ble  the  to  p.f^  value  impute  and  so  of  marginal  labour's  on.  p.Q  its  =  wage  Equation  w.L  +  product  rate, w  is  =  equal  p.f^;  rate  (6) can, therefore,  r.K  +  pm.M  +  to  be  pt.TR  its  of  price.  return  written  +  Therefore, to  durable  it is  possi-  capital,  r  =  as:  pf.F  (7)  or value  of  output  (p.Q)  =  labour  share  materials +  where  pm,  pt  and  quantity  of  timber  opment  of  the  of  output  2.2.1  SHARE  viewed  into  the  extended  production to  The generality, 1.  what  2.  include  the is  A  forest  how  this  is  the  l n other factor? 9  basis words,  for  first  a  of  (7)  be  by  (pt.TR)  materials, is  central  modified income  firms  factors  'quantity  Using  share  +  share  of  :  to  stumpage to  the  (per  further  incorporate  the  unit  develshares  (profit).  INCOME  payments  of  (r.K)  this  of  for  desired  production,  index'  and  assumption,  can  be  equation  government  services  government  services  explicitly  introduced  (7)  be  can  readily  share.  factor,  three  however,  questions  poses  must  function  be  in  several  questions . 8  Without  loss  of  addressed:  the  corporate  sector  which  dominates  industries?; factor  is paid  discussion  price  entrepreneurial  'entrepreneurial'  Canadian  good  forms  tax  stumpage  Equation  'essential'  function.  following the  fuel.  as  an  means  entrepreneurial  production  8  by  as  capital share  (pf.F)  it must  and  considered  measured  +  ENTREPRENEURIAL  may be  and  However,  AND  are  be  share  +  respectively, the  by taxes  If taxes  may  are  model.  (pm.M)  fuel  harvested)  captured  TAX  which  pf  (w.L)  on this  is the  of  production  its VMP,  is there  all these  questions  rewarded? anything  is found  left  in  If  each  for this  explicit  factor  factor ?; 9  Bronfenbrenner  (1971),  subsection. 'adding-up  theorem'  consistent  with  the  of  returns  to  this  which  16  3.  how  can  In ultimate  classical  and  only  are of  no  by  help  which  the  efficiently production  profit may  is be  follows.  or  this  stocks  and  the  Indifference a given  factor  the  a factor  of  in  played  is  is  the  production,  the  traditional  perceived  the  residual  reward • of  corporate  separated.  sector,  Decisions while  this the  are  risks  definition  'entrepreneur'  those or  is  uncertainities  otherwise  assumed  by  in  of  as  the  after  factor.  all This  functions  made  and  by  of the  uncertainities  'entrepreneur'  defined  that  claims  are  risks  of  stock-holders.  as  cannot  transferable  expectation  common  in can  2.2,  (2)  of  factor an  be  at  to  how  may  investor  contractual used  that  be  is  transformed in  rewards.  Enterpreneurial and  'factor'  involved  higher  honoured  component productivity  have may  of  its  the In  income  paid. This  of  each  invest  the  same  and  a or  residual  part  quantity  factor  component  of  on  and  of  categories:  (1)  their  and  entrepreneurial  savings of  allocate  at an  incomes  common  same  its  firm.  budget  for  components.  contractual  represents  assumed.  in  the  contractual  the  employed  as  how  debentures  y-axis  is  his  will  is explained  two  contractual  a firm  the  This  into  depending  both  how  arises.  divided  entrepreneurial  price  the  are  interest-bearing  represents  explicit  residual  factors,  analyze  between  x-axis an  to  this  production  entrepreneurial  the  the  as  factors  single  employed  the  is the  are  all contractual  production  entrepreneurial  difference  is  and  rest  In figure of  risk  example,  curves  for  still remains  A  For  which  is  negative.  factors,  components.  The  purpose,  determined.  Profit,  In the  (1971),  insurable,  after  question  contractual are  residual  For  Thus,  entrepreneur  are paid,  firms.  organises  responsibility  role  positive  The  production  also  hedgeable,  this  the  of  Bronfenbrenner  process.  corporation,  the  case.  the  into  of  uncertainity-bearer.  share-holders.  in this  assumes  role  uncertainity-bearing  which  Following  the  unincorporated  and  management borne  measured?  and  factors  for  decision-making  be  economics,  implicit  holds  paid  factor  decision-maker  explicit view  this  component  the  quantity  of  implicit  price.  No  However,  the  shape  17  of  the  isoquants  uncertainties  and  employment the  other  employed in bad  of  Q1,  Q2  and  risks.  For  example,  an  hand,  Q3  entrepreneurial  management  contractually,  depends  how  management  factor  may  on  may  dilute  may  perceive  both  control  perceive  that  if  factors  may  suffer  entrepreneurial  management  too  many  perceives  that  excessive  and  profits.  On  factor  inputs  are  unbearable  losses  specially  times.  EC  FIGURE  tween  2.2:  Indifference  There  is,  both  types  budget  the  points  at  B and  C.  El  and  that  component  For  Having  entrepreneurial  components  of  a factor  a  factor  compelling inputs.  the  of  price  example,  at  of  contractual  p1  and  that  at point  the  need  Let  D1,  which  factor  lines point  the  D2  both  the  contractual  arrive and  C1.  (p2.C1)  total  contractual  of  optimum price  prices  factor  (CC)  the  isoquants,  be  price p2.  balance lines  of  inputs  entrepreneurial  component  proportion  and  the  the  the  of  Let  an  be  of  to  quantity  optimum  the  D3  types  and  given  at  upon  is (p1.E1)  and  (EC)  input  tangential  component of  A  of  are A,  to  depend  combination  determined of  for  slopes  which  be  analysis  optimum  components  components  of  the  The  A,  these  therefore,  lines),  components.  curve  of  (or  both is  that  the the  given is,  be-  by  points  component  is  entrepreneurial  The  total  outlay  on  entrepreneurial  and  contractual  respectively.  outlay  on  the  factor,  a  weighted  18  average  price  (pr)  p2.Cl)/(E1+C1). firm)  would  VMP  of  (p1).  A  this  that  factor  total  circumvents  the  entrepreneurial  this  abstraction  =  its  not  +  is  r.K  a factor  so  by  the  pm.M  price  +  the  =  of  the  at  which  the  contractual  component  the  total  +  unincorporated  (E1+C1), not  (p1.E1  price  employed  value  of  output  entrepreneur.  nature  cannot  of  the  theorem'.  be  equation  +  pr  case  the  between  the  pt.TR  in  to  'adding-up  of  formula:  (pr),  price  by  conceived,  the  production,  difference  explains  extension  +  of  average  is retained  by  entrepreneur  contract  only  the  computed (or  the  created  factor,  w.L  of  the  that  payment,  justifies  be  weighted  only  problem  the  p.Q  quantity  balance,  exposition  can  management  pays  contractual  This  factor  equals  Management The  the  rational  employ  contractually. and  for  It  may  empirically  (7) as  pf.F  residual  +  be  but  also  noted  that  measured,  however,  follows:  r.tax  +  pr.E  (8)  or value  of  output  =  labour  share  (pm.M) +  where rate)  and  T and  called  the  ments  of  be  the  implicit  price  for  into  the  +  price  and  share  (pt.TR)  profit  for  Two  +  fuel  government  still  and  or  respectively.  services'  function;  materials'  share share  (pf.F)  (pr.E)  factors,  problems  +  energy  share  'government  production  (r.K)  homogeneous  entrepreneurial  identity.  factor'  share  (T.tax)  imputed  capital  remain: so  ( tax  Equation (1)  that  (2) the  services  the  these  (8)  measure-  factors  estimation  is  of  can  such  a  function.  FACTOR  A  'relative  of  output'  as,  share  the  brought  RELATIVE  divided fined  are  'entrepreneurial  production  'value  tax  +  stumpage  'income-accounting'  explicitly  2.2.2  pr  +  (w.L)  by  factor and  nominal  (w/p),  SHARES  that  a  share' 'real  output is,  may factor  price.  wage  (w)  For  be price'  defined may  example,  divided  by  as  'factor  be  defined  real  labour  nominal  share' as  nominal  price,  output  divided  (p^),  price  (p).  by  factor may The  be  the price de-  relative  19  labour  share  (SL)  (p.Q),  that is,  SL  =  may  be  defined  (w.L)/(p.Q)  =  as  labour  (w/p).(L/Q)  share  =  (w.L)  divided  by  value  (w/p)/(Q/L)  of  output  (9)  or SL  where  =  (w/p)  is  labour wage  2.2.3  (real labour wage)/(labour  defined  and  do  changes  in  and  production  over  This  problem  right-hand  side  of  in  (9b)  relative  by  =  IN  real  can  labour share,  (d(L/Q))/(L/Q))  =  equation  labour  and  of  labour  or  FACTOR  prices,  bring  addressed  +  share  =  the  =  factor  about as  productivities,  changes  follows.  in  elasticities  relative  Total  factor  differentiation  (w/p).d(L/Q)  provides  an  ((d(w/p))/(w/p))  the  expressions  represent  respectively.  PROPOSITION  I :  the  rate  of  change  of  shares of  the  (9b)  equation  the  for  the  rate  ((d(L/Q))/(L/Q))  (9c) can  of  change  be  (9c)  rewritten  the  of  equation  in factor  rate  of  change  in  productivity.  as:  - ((d(Q/L)/(Q/L))  ((d(w/p))/(w/p)), rate  This  +  equation  ((d(w/p))/(w/p))  share of  real  SHARES  change can,  (10)  ((d(Q/L))/(Q/L)),  in  the  therefore,  expressions be  restated  lows:  =  the  productivity.  RELATIVE  - ((d(Q/L))/(Q/L)),  (10),  ((w.LV(p.Q))  product  that is:  ((d((w.L)/(p.Q)))/(w.L)/(p.Q)) (Q/L),  (9a)  (9) yields:  (d((w.L)/(p.Q))/((w.L)/(p.Q)))  ln  labour  (L/Q).d(w/p)  relative  physical  factor  be  (d((w/p).(LVQ)))/((w.L)/(p.Q))  Since  as  technology  equation  d((w/p).(L/Q))  Dividing  marginal  CHANCES  substitution time?  the  (Q/L) is defined  INTER-TEMPORAL  How  as  productivity)  change  in  real  factor  the  relative  price  -  the  factor rate  and (w/p), as  fol-  20  In other words, depends  on  marginal is  the  the  changes  in  change  in  the  relative  change  combination,  one.  production  Allen  ratios  substitution if  elasticity  capital of  point.  be  of  to  (MRTS)  of  (K)  =  shown  Substituting  a  =  the  is  of  rate  of  to  to  the  relative the  is  factor  labour  for  capital  for  -in  this  MRTS result  =  of  search  another. for  of  a  factor  in  different of  (Gould  is defined  When  This  =  there  optimal  obviously  affects  the  relative  shares  of  a  factor  along  the more  factors  depends  upon  the  responsiveness rate  Ferguson,  factors  of  of  of  technical  1980).  For  production,  exthen  as:  (10a)  (w/p)/(r/p)  =  (w/r)  at  the  equilibrium  get:  =  is  relatively  ((d(K/L))/(K/L))/((d(w/r))/(w/r))  ((d(K/L))/(d(w/r))).((w/r)/(K/L))  is a  the  marginal &  substitutable  production  (10b)  or  a  the  substitution.  the  10(a), we  affect  employed  for  in  =  This  (ii) there  new  factors  changes  MP^/MP^  (or  long-term  the  and  ((d(K/L))/(K/L))/((d(MRTS))/(MRTS))  that  price  The  change  measures  labour  1.  prices  a,  two  share  productivity.  factor  as  other  factor  factor  analysis;  by elasticity  the  (L) are  of  price  between  denoted  real  factor  1986).  expensive  measured  a relative  chapter  real  quantities  less  proportional  in  period  entrepreneurs  the  in  technological the  relative  change  enunciated  during  substitution,  and  in  no  and  one  change  substitutability  given  substitution  a  It can  technology  of  there  substitute of  rate  Nautiyal,  adjust  degree  elasticity  factor  ample,  They  in  compared  prices,  is they  change  (Singh &  a factor  factor  the  hypothesis  industries  of  in  (i)  that  the  and  principal  that:  price  The  factor)  forest  isoquants.  asserted  between  an industry  the  that  be  productivities  assume in  the  the  of  technology  the  the  factor  Now  relevant  of  for  competitiveness  costly  difference  product basis  it can  ((d(K/L))/(d(w/r))).(wL7rK) factor  employed  over  (10c) time.  21  However, can  be shown  factors share is  the effect as follows:  of production. of capital  assumed  of elasticity  The ratio  (rK/pQ)  that:  let labour  (wL/rK)  with  respect  to  respect  to the second  =  p.  given  share  (wL/rK)  =  by differentiating  and substituting  (wL/pQ)  For the purpose  Then,  factor  shares  (K) be two arbitrarily  labour  (w/r).(L/K).  and (K/L) = (w/r) is  on the relative  (L) and capital  of the relative  is (wL/rK)  w/r=0  of substitution  the relevant  to the relative  of simplification, it  0/p. The change  the first  values  chosen  from  expression  in  with  (10b) and (10c).  That is:  d(0/p)/d(0) = <(p - <j>.dp/d<j>)/(p.p) It follows increases. 1,  That  the ratio  shares the  remains  decreases  as follows,  for a  share  the same  the factors.  share  generalized,  (11) that,  is, the labour  of both  labour  from  If a  <  1, the ratio  increases  implying  = (1 - a)lp  relative  that  compared  to  is  no  capital  relative  ( Gould  share.  factor  share.  =  in the  suggesting  This  result  & Ferguson,  shares  For a  change  1, the ratio declines  the  for any pair of factors  of the relative  to the capital  there  is greater than  (11)  that  can be  1980):  PROPOSITION II: Consider a pair of any two substitutable factors of production. The relative factor share of one factor increases, remains the same, or decreases accordingly as the elasticity of substitution of this factor for the other is less than, equal to, or greater than unity.  Now  let assumption  technological the  change  production  o n relative  function  depending  on whether  factor  another  for  prevailing factor  For of  1  production.  °This  A  definition,  1  0  be relaxed  factor shares.  and can be defined the marginal  diminishes,  ratios  example,  (i) above  rate  remains  in order  to examine  Technological as factor-using,  of  technical  unchanged,  change  causes  a shift in  neutral, or factor-saving,  substitution  or  the effect of  increases  (MRTS) at  the  of one originally  .  let labour  technological  due to Hicks,  (L) and capital change  will  is quoted  (K) be two arbitrarily  be said  from  chosen  to be capital-using,  Gould  & Ferguson  (1980)  factors  neutral, or  22  capital-saving capital  accordingly  for  labour  capital-labour rate  of  remains  progress  capital-labour  ratio  that  increases of may  at  to  that  is  and  that  decline  that  of  that  of  at for  (K/L)  labour  labour  the  the  share  same.  the This  implies  By  change  increase.  causes  This  result  the  is  for  (w/r)  not  labour  decreases  means  the  line  can  if  unchanged.  This  the  Now,  given  capital  that  marginal  shares  ratio  a similar  the  same  of  same.  that  (w/r).  remains  MRTS  of  the  relative  wage-interest  decreases.  to  of  the  remains  technological  equals  remains  (MRTS)  given  equalibrium,  labour  labour  the  substitution  increases  the  ratio  relative  point,  or  w/r)  the  (K/L) the  capital-saving  and  that  capital-using,  ratio that  technical  same,  (=  that the  of  capital  MRTS  equilibrium  given  the  of  implies  change  to w  increases shown  This  the  rate  Recall,  (MRTS)  capital-labour  relative  be  capital  is,  the  capital  same.  II suggests  technological that  the  neutral,  (K/L).  Proposition  decreases, given  is  marginal remains  substitution  technological  If  the  decreases,  ratio  technical  affected.  as  relative  of  r  share  reasoning,  relative  be  that  share  generalized  it of  as:  PROPOSITION III: the relative share of a factor ( compared to another factor ) increases, remains the same, or decreases accordingly as technological change is factor-using, neutral, or factor-saving; the opposite relationship holds for the relative share of another factor (Could & Ferguson, 1980).  Propositions and in  bias  of  'relative  relative tween insights  (8)  is  factor various into  is  the  not  and  the  deduced.  be  the  This  one  bias  available,  can of  then  about the  Conversely,  deduce  the  technological  elasticity  directions if  of of  the  inter-temporal  possibilities change.  of  These,  substitution changes  changes  substitution in  in be-  turn,  provide  income-accounting  identity  structure.  proposition  necessary.  information  can  underlying  raises.  if  are  constructed,  thesis  that  change  known,  industrial  II and this  are  factors  correctly  questions tion  shares'  shares  given  proposition  III imply  technological factor  If,  II and  production  then  function,  equations  III provide  an  Direct  econometric  study  follows  this  (9),  the  (10)  analytical  proposition  framework  estimation approach  or  of and  such  to  I,  address  (11) the  a production  concentrates  on  or key  func-  realized  23  costs  of  cost  production  functions.  2.3  next  its  the  services. 'factor  shares' any.  section  This  is,  be  of  various  explains  approach  factors,  this  The  imputed.  The  residual,  and  sum  of  value  assuming  methodology  that  above  factor  share  divided  by the  by  relative  implicit  production  and  in detail.  manner.  value  'factor  prices',  ratios',  'factor  analyzed  way,  price through  value  output  Ratios  'factor  the  by of  that factor  time-series quantities',  ratios',  the  the to  the  gains,  of  if  shares  of  labour,  publications  'money  value  'factor  factor  shares  of  producer.  capital  in various to  use  Existing  resulting  realized  returns  between  of  gross  yield  the  capital'  of are  gross  output  entrepreneurial  factor.  another  data  on  'relative  and  'relative  regression  analysis.  'factor  factor  shares',  prices',  share  are  Factor  Output  are  each prices  quantity  dividing  one  relative  obtained  'relative  shares  dividing  factor.  of  'factor  ratios'  factor  Similarly,  ratio  prices  by  prices.  productivities.  their  factor  factor  the  relative  imputed  homogenized  yields  and  yield  are  relative  factor  inputs  output  prices  aggregated  yield of  the  assigned  Factor  the  quantities  the  the  constructed.  percentages.  gross  a factor  this  by  of  of  In  (8) is  is  potential  available  and  to  production.  of  and  directly  shares,  of  for  a cost  excluding  nature  capital  payment  and  cost  basis,  difference  of  input  another.  durable the  factor  output  are  receives  total  share  gross  quantity  factor  share to  as  the  of  identity  the  the  cost  mentioned  divided  expressed  by  divided  shares  to  of  taxes  is,  factor  realization  of  and  share  income-accounting  are  share  The  a  the  stumpage,  Canada.  which  on  each  income  a part  stresses  1986).  Factor  an  therefore,  Statistics  Thus,  is  determined  materials,  the  production,  payment  share'  can  energy,  process  This  (Ovaskainen,  are  to  METHODOLOGY  In  A  The  attributable  in  a  factor  the  factor similar shares',  productivities',  'factor  generated  trends  and  24  2.3.1  TRENDS  AND  Linear  trends  time-series  ANNUAL  are  y  is  explanatory of  the  any  function, meanings. growth some  using  is  rates  is  Estimate) suggested rate'  of  regressions  and  b  are  In  y  for  variables; to  be  &  Buse  estimate  of  and that the  problem growth  of  estimate  b  of  t  is  estimated.  1  1  and  This Jr.,  of  b  that  is:  techniques.  The  time,  only  The  the  significance  other  method  g  is  the  =  rate  1  rate of  change  was  observed  'Autoregressive  (AR)  error'  exponential  have  preassigned  estimating  annual  suggested  (1987).  Once  occasionally, (Best  an of  2  its  by b is  (exp(b) -1).  that,  this  or  an  been  Buse  BLUE  considered  is  for  has  &  variables  y=a.exp(bt),  symbols  equations  by  dependent  exp(bt)  observed  continuous  appropriate  the  Johnson  given  (1987)  They  gives  is  autocorrelation  rates.  .  in  where  these  Johnson  growth  change.  b.t,  function  footnote  of  form,  +  the  rate  the  a  either  including  Johnson  percentages)  using  in  annual  as  In  logrithmic  rate - of  and  (OLS)  form:  dependent  functional  =  the an  functional  parameters  (expressed  natural  Jr.,  interest,  The  mentioned  that  that  least-square  (12)  assume of  ordinary  following  exponential  researchers  Johnson researchers  an  explained  effective  using  b.t  rates  rationale  empirical  estimated,  a  form:  the  The  +  RATES  is tested.  logrithmic In  the  above  growth  estimated  a  and  time variable  equivalent  =  of  variable;  Annual are  analyzed  data are fitted to  y  where  GROWTH  erroneous  change,  is given  and  Linear  while  like  applied Unbiased  view an  and  'instant  by 'g'.  estimating  'moving  averages  trend (MA)  T h e continuous rate of change and percent continuous rate of change in a variable y are given respectively by dy/dt and dy/(y.dt) = b (say). The latter equation can also be written as: dy/y = b.dt. Integrating this equation, one gets: In y = In 1  1  a + b.t, where In a is the meanings as assigned earlier. a.exp(bt). 1  2  see  footnote  11.  constant of integration and other terms have the Taking anti-log on both sides, one gets: y =  25  error'  models  were  autocorrelation. Shazam be  In  statistical  mentioned  used case  of  package  here  to  correct  each  (White  that  parameter  regression,  et  estimates  parsimonious  ah; 1986) was  used  the  model  for this  2 R may be significantly  reported  for  high  problem was  selected.  purpose.  because  of  of  It may 'lags' in-  2 troduced  in  AR/MA  models.  Therefore,  reported  R  is  required  to  be  interpreted  with caution. 2.3.2  PROBLEMS  The kinds  of  problems each  industries gas;  capitalized  of  output  numbers  chips,  reason,  this  quantities  of  aggregated  numbers  are  constructed  P2 ,..., t  Pjf-'PnP  aggregated (t-1)),  into  (Z)  as  paper  the  Divisia  output  and  scalars.  The  and  level  Ideal,  the  underlying  of  q2 <  vectors in  ..,  t  in  period  t,  the these  Chf"' !,-^  of  function.  For  prices  and  Such  that to  index are  a r ,  0  relative  is that  indexes  factors.  t  lumber,  Divisia  measure  period  other  numbers'.  that  homogenized 1 t  price  therefore,  (ii)  to  and  logs,  aggregator  numbers  q^ = ( q ,  price  and  in the sense  index  let  problem,  of  forest  and natural  machines  types  different  example,  petroleum  the use of 'index  aggregated  follows:  quantity  different  employs  For  equipment,  Fisher  for  products.  The first  formulae  forms  employs  as  buildings,  necessitates  industry  as electricity,  produce  (i)  Each  of  such  and pulp.  number  ke  d  P  index = t  (P-| , t  are  to  be  period  t1  (=  in the Divisia formula is:  log  where  such  functional  study  variety  energy  considered  flexible  a  industries  index  are many.  of  and inputs. This  (1976)  with  types  capital  as superlative  consistent  produces  Forest  and shakes,  Diewert  this  different  types  methodology  and  expenses.  aggregating  METHODOLOGY  in this  factor  engage  different  shingles  IN THE  s.^ =  is over  year (1971).  D = (0.5).Z(s  (p.^q.^Ap^.q^'), i = 1,  +  t  2,  3,  Jt  q'  s. ). log(p / n  is the  ,n. The  Divisia  i t  transform index  P j t 1  )  of  (13)  row vector  number  q,  and  (D*) is chained  summation  to the base  26  The capital  second  stock  many  using  the  no  regards  a  study  measure  capital  next  (1985)  propriate  method  Canadian  the  equation:  tax  r  problem  P.,  is  an  (1976),  has  which  aggregate been  Diewert  durable  The  of  is  capital  stock  steps  in of  durable  addressed  (1976),  detailed  main  is  this  by  Hulten  &  measured  Statistics  depreciation  Canada  method  is  for  of  imputing  of  Pen  a part  financial  the  the  systems,  the  This  are  of true  capital  to  the  'durable as  that  the  the  of  Boadway user  capital.  cost  They  cost  of  capital  p . ( i + d-c).((1-x)/(1-u)).(1-ua/(a + i + pi))  capital  price  index;  i is  the  real  and  capital,  has  savings  rate'.  The  (1981)  and  is  the  suggested (r) is  apthat  given  by  (14)  K  implicit  stock  'interest  method  flow  capital.  productivity,  aL  not  the  of  of  this  industries  capital'  further  them  does  and  stock  et  the  Statistics  forest  price  capital  all  depreciation  method  stock of  there  Therefore,  of  rate',  user  of  1986).  of  that  series,  method  this  that  between  number  rate.  studies  price  stock  determination  interest  empirical the  returns  suggested  in  capital  proportion  'interest  (1971)  affect for  the  net  and  choice  though  a  mid-year  that  determining  and  the  even  stated  the  (Constantino,  in  a uniform  also that  studies  be  play  durable  depreciation.  to  issue. all  of  (1964)  depreciation,  conventions,  depreciation  stock  Wright  economic  estimating  empirical  line  is  'true' mere  In  determination  argued  =  problem  depreciation,  method  is assumed  investors  Martinello  for  line  Capital  preferences of  13-522.  were  'economic'  a controversial  expectations  method  measure  straight  true 1986).  liquidity  where  the  capital'. The  remained  to  in a number  services  The  and  straight  uses  aggregate  economic  convenience.  the  'money  'true'  of  (Constantino, of  the  matter  also  This  of  I.  proposed,  used  measurement  The  and  or  been  of  Coen  inventory  13-211  available  the  that  (1964),  (1980).  used,  uses  is  depreciation.  Wright  Usher  in Appendix  methods  Canada  periodical  no.  method  problem  perpetual  catalogue  As  being  and  revised  described  was  its  including  (1976)  (1986)  has  and  scholars  Wykoff  major  after-tax  interest  rate  ( i.e.  27  i = l((1-u)-pi); inflation tax  for  rate;  credit,  and  I is  the one  ratio  plified  the  that  are  of  the  national  a straight  the  stock.  mined,  the  'money  capital'  utilized  at  present  P|<  .(l  in  c  +  interest  corporate  capital  balance of  the  tax  gains,  x  rate;  is  pi  the  is  the  investment  capital  consumption  allowance  capital  consumption  allowance  d  rate  After  the  is  the  the  user  Moreover,  present for  study  rate  taxes  while  x equal  to  I is  the  McLeod,  being  capital  index;  the  Young,  gains  depreciation  derived  separately  (r.K)  and can  quantity be  assuming  taken are  equation  (K)  easily  that  the  Weir  inflation  deflator  imputed  are  requiring as  a a  ignored.  (16) is sim-  (15)  price  (r)  capital  zero:  implicit  share  of  in taxes. Therefore,  (GNE)  cost  cost  - pi)  capital  of  for  and  the  computed. entire  industrials  bond  is  from  rate  (pi)  the  depreciation  for  of  10  each  rate  (d)  of  the  component  capital  stock  Similarly,  amount  derived  of  the  money  are  deter-  return  to  capital  is  mid-year.  computed  factor  from  prices,  the  raw  factor  quantities,  data,  the  framework  described  above.  There  numerous  problems  associated  example,  value-added?  what How  consistent  and  associated  with the  should should  comparable  be  This  regarded  desired over  the  data are briefly  output  analysis  theoretical  For  the  real  value  available.  and  expenditure  capital  Once  are  is  is  formulation  accounted  u,  implicit  line  capital  c  u  a declining  readily  also  setting  nominal is  is  not  is  =  yield; gross  complex  credit  as follows,  the  rate,  of  is the  production  r  where  depreciation  rate;  investment.  very  tax  interest  percentage  a  factor  Investment  the  of  is  data  nominal  ua/(a + i + pi)  dollar  separate  is  a is  This lot - of  d  the  proceeds  is,  however,  with  as  data  the  output be  period addressed  prices  in more  collection for  an  collected?  of  and  analysis?  in the  next  output  quantities  accordance easily and  industry: Are  the  These  and  section.  with  said than analysis gross  of  the done. data.  output  collected other  are  or data  problems  28  2.4  SUMMARY  The industries by  two  OF  data for  used  the  the  a.  b.  study  consist  1957-1984.  Statistics  in reporting  data on  The  standard  SIC  code  A  new  on c.  The  of  annual  choice  of  observations time-period  for  is  each  of  governed  the  mainly  code,  is  capable  of  principal  'establishment',  as  accounting  statistics, was  to  the  principal  added  changes  greatly  data.  This  from  this  study.  The  desired year  census  What gross  output  (CNP)  is  data  data of  is  this  an or  out is  three  major  1948  was  revised  and  a  new  to  on  which are  all  obviate for  to  forest  is the  from  this  production  unit  desirable  data  entire  concept  of  'total  activity'  and  the  consistency  and  comparability  difficulty, the  data  is  this  Statistics  forest  are  format  Canada  industries  available  which  industries  the  groups'  of  1957  last year of  collected  of  most  revised  back  the  the  a new  'industry  problem  the  time  reporting  activity,  various  data. To  which  independent  statistics.  the  data  and  an  only  is taken  for  the  1963  and  first year  available  in  revised  (except  as the  currently  for  only  of  upto  study.  various  publications  of  Statistics  Canada's  manufacturers.  generally  cancelled  for time  1984,  all the  caused  time-series  industry  onwards)  modified  time-series  reported  logging  following  introduced.  was  with  the  introduced.  manufacturing  their  industries,  classification  the  dealing  introduced industries:  to  reporting  the  various  industrial  definition- of  the  Canada  In addition  These  get  this  1960,  which  annual  in  period  year  changes  Almost  UTILIZED  considerations:  In  i. 'A  DATA  appropriate  measure  value-added? a measure in not  the  In of  'output'  national  true,  for  economies,  value-added  process  generally  of  net  of  measuring  as  an  of  industry  all  CNP. may  the  purpose  the  gross  hire  the  this  national  intermediate In  of  product  products  case  of  a considerable  study:  which  individual amount  29  of  raw materials  value a  of  part  avoid try  used of  (the  raw  the  value  dustry (i.e.  to  is  be  price  x  as  the  output  is  obtained  output,  the  working  made  to  contributions, workmen's  entire  industries  in  payments,  of  the  all  of  fuel  activity  output  by  in the  production  related  leave,  bonuses,  owners  industries  social are  not  These  welfare,  data  are,  paper and  for  &  allied  of  the  This  As,  however,  errors,  if any,  are  considered  Stumpage  income  is  separated  materials  and  of  the  of is  this  values  one  of of  of  of  the  the  component  only  3  quantity  of  the  price  of  employees  direct  all  payments  other  imputed obligatory  employees, Data  on  towards the  industries  for  all  outputs to logging  about  latter  for  the  manufacturing  analysis.  The  missing  of  the  wood  that  of  total  industries of 4%  the of  to data  direct  insignificant.  from  services  the is  value  of  assigned  materials to  the  and  factor  A brief composition of various factor inputs, used in this study, Appendix IV. Care has been taken to avoid double-counting. 1  output of  other  weaknesses  is  in-  value  commissions;  respectively,  output  for  forest  period  of  the  The  indus-  each  value  all  funds. all  of  to  chapter.  their  available  entire  industries,  value  industries.  for  however,  proportions  output  and  of  pension  the  an  workers,  partners;  available  of  comprises  behalf  and  readily  industries as  on  output  index  and  form  taken  energy,  an  must  The  be  The  following  paid  and  &  industry.  must  value-added.  including  therefore,  of  of  inventories.  share  extracting  value  total  value  study.  the  value  the  labour  analysis.  this  the  in  Hence,  the  industry  care the  The  the  extracting  change  the  of  partners.  by  the  However,  industry.  the  outside  outside  measure  is explained  made  all  of  includes  3  and  industries  total  employed  rest  1  the  and  of which  industry.  the  sum  working  and  of  appropriate  the  of  manufacturing  an  of  from  from  the  to  estimated,  industries  that  factor  purchased  plus  dividing  contributions  and  are  by  products)  of  output  the  compensation,  period  is  materials,  workforce  made  obligatory  is  of  owners  the  payments  gross  shipments  value  labour  which  output  construction  The  intermediate  Therefore,  quantity)  stumpage,  data  of  the  defined  called  material  double-counting.  seems  and  so  supplies. - materials,  is given  in  The as  30  defined  for  the  The four  purposes  value  different sources  which  are  energy  generated  paper  and  source,  It  this  tax  does  not  not  of  assuming most  this  for and  the  only  -  electricity,  coke,  as  of  this  industries. to  sales  study.  As,  be  wherever  accepted  tax  this  the  paid  for.  federal  other tax.  Sales  is  component  has  been  same  cost  ratios  to  deal with  as  data which  for this  does  This  is  not the  fuel  not  available  into  All  petroleum  the  is  other  products  include second  for  any major  consumption  big  tax  such  is As  deliberately  that  These  of  in  this  the  energy  the  corporate as  cost  costs  income  property  not  neccessary  data  on  the  taxes.  for  the  excise  tax  ignored.  disaggregating  establishments.  problem.  ****  provincial  taxes  relevant.  report  jointly.  and  local  tax  materials  are  divided  petroleum.  with  Energy  data  the  excise  the  added  is  unavoidable.  and  establishments of  not  which  and  bill.  excise  with  gas,  been  fuel  energy  underestimates  only  and  natural  and  as  applicable,  cost  way  total  however,  includes  purchased  have  omission  the  reasonable  and  the  However,  problem small  less  the  establishments  available,  major  components stumpage,  data,  study.  includes  50%  at the  include  readily  A  than  component  tax,  this  significantly  flaw has  logging  purposes are  the  allied  The tax,  are  more  of  fuel  categories  energy  weakness  of  of  of have This  fuel  various and  been seems  cost  electricity,  disaggregated to  be  the  3.  3.1  CANADIAN  RELEVANT  LITERATURE  For  purpose  the  Canadian  logging  Canadian  paper  a  number  of  widely  Canadian  forest  guidance  is  the  forest  of  industries.  study,  04) ,  diverse  (SIC  : STATISTICAL  this  level  a  priori  form  However,  the  the  Canadian  Canadian 27). This  industries.  at  to  the  1  industries  industries  available  this  (SIC  allied  INDUSTRIES  ANALYSIS  REVIEW  industry &  FOREST  No of  forest  wood is  study  expectations on  the  (SIC  extensive  production  aggregation  literature  industries  a very of  industries  is  readily  about  the  constituent  include  the  25) and  the  aggregation  technology  of  in  the  Thus,  no  empirical  results  for  industries  is  available.  steadily  growing.  3.1.1  LOGGING  INDUSTRY  Production studied.  Woodland  published  some  1946  to  Rao  &  Preston  (1983)  (1975)  estimated  &  1959  to  which  estimated  has  2  and  not  yet  been  Martinello  widely  (1985)  have  in this area.  Rao  progress  reported  industry ,  inputs.  data from  and  logging  reported  annual  also  the  and  factor  (1985)  in  1969  various  technical  (1975),  work  Woodland from  technology  and  capital  a translog  generalized  very  Preston  1979  was  a  cost  limited  (1983)  possibilities  estimated  reported and  Leontief  function  saving  using  function  for  returns and  annual  using  substitution  a translog  constant  labour  cost  cost  to  material  and  using.  data from  between  function  scale  1963  data  using  positive  Martinello to  1982  that:  "...energy  and  wood  are  estimated  to  be  complements,  while  all other inputs are estimated to be substitutes. However, capital and w o o d are not easily substituted for one another. The technical change is capital, energy and w o o d using, so the demand for those inputs increases, holding output and factor prices constant. Therefore, capital, energy and wood become less productive over time as a result of technical change. The demand for labour decreases over time as a result of technical change and labour becomes more productive since the technical change is labour saving."  SIC refers to C o d e , 1980. 1  standard  For the purpose of included in SIC 04. 2  industrial  this study,  classification  the  logging  as per  industry  Standard  refers  Industrial  to the  Classification  industry  group  3.1.2  WOOD  The  INDUSTRIES  wood  industries.  Some  structural  changes  industries of  during  integration  within  group  industries  of  individual  the  (1984)  aspects  Phillips  from  has  some  1959  to  1979  decreasing  cost  increase  in  used  the  using  and  to  material  and  using.  a  cost  possibilities technical  for  the in  (1985)  1982  &  and  (SIC  for  function  period  have  (1986)  examined  Banskota &  Preston  (1983)  using  annual  between is  capital  data factor  saving,  (1986)  also  estimated  1955-82  and  reported  estimated  reported  (1986)  industries.  which  productivities also  on  Martinello  substitution  Nautiyal  literature  251).  &  wood  change  this  industry.  Rao  the  horizontal of  Nautiyal  lumber  industry. of  and  technology  Constantino  B.C.  translog  Singh  &  industry  technology  decreases  to  the  vertical  considerable  nevertheless  Singh  and  milling  data  Martinello 1963  of  positive  annual  industry.  data from  saw  limited  scale;  using  industry  production  reported  and  manufacturing  undergone  production  lumber  technology  estimated  productivity  lumber  annual  the  the  Canadian  to  studied;  (1985)  products  Alberta  (1983)  and  function  labour  of  returns  energy,  translog  the  aspects  Preston  labour,  wood  of  due  The  widely  of  have  3  mainly  industries.  Martinello  group  group  years,  been  technology  studied  this  thirty  yet  production  &  in  not  B.C.  the  in  forest  growing.  Rao  inputs;  tion  of  (1985)  examined  and  the  last  Canadian  is  a significant  industries the  production  studied  some  the  industries  studied  the  constitute  of a  other  factor  translog  cost  and  The and  energy  capital  and  func-  that:  technical change is labour and w o o d saving and energy using. The increasing costs and the capital using  technical  energy  change  increases  over  mean time,  that  the  holding  demand output  for and  For the purpose of this study, the w o o d industries (SIC 25) are comprised of sawmills, planning mills and shingle mills (SIC 251); veneer & plywood mills (SIC 252); sashes, doors and other millwork (SIC 254); wooden boxes & pallets (SIC 256); coffins & caskets (SIC 258); and other w o o d industries (SIC 259). 3  an  inputs  "...the estimated technology of sawmills and shingle mills shows how much more substitutability, between factors than the pulp and paper industry. The estimates show that labour and w o o d , and capital and energy are used (essentially) in fixed proportions, but all other pairs of inputs are substitutes.  capital  a  prices constant. The labour-saving technical change outweighs the negative technical change effect so the demand for labour increases as a result of technical change. The technical change is not wood saving enough to outweigh the increasing costs and the demand for w o o d increases slightly over time. Therefore, labour becomes more productive over time as a result of technical change, while capital, energy, and w o o d becomes less productive, holding output and factor prices constant.."  3.1.3  PAPER  AND  The studied (SIC et  aL  try.  production  more  04).  than  and  Martinello of  Using estimated were than  taken one  Rao &  inputs.  data from  capital,  scale;  and  energy, input factor  are  used  of  for  material  1959  to and  and  labour  capital  paper  1961  to  mills  material saving  industries  have  et  aL  than  for  energy  material of  labour.  a long-run  and  (1981)  and  elasticities  They  some  271).  energy  one  indus-  studied  Denny  inputs.  Denny  27) for this  own-price  estimated  been  example,  (SIC  labour,  has  4  logging  For  (1983)  1975,  greater  the  origin.  capital,  and  and  Sherif  and  and  industries  data (SIC  long-run,  1979  energy,  25)  recent  and  which  reported  allied  two-digit  pulp  from  &  (SIC of  (1986),  27)  and  paper  less  Rao  translog  reported  &  cost  constant  and  material  271)  from  re-  using  change.  Sherif 1977  labour,  and  Singh  They  energy,  with  (1983)  function  capital,  function  studies  (SIC  as  used  technical  &  the  industries  technology  cost  (1983)  wood  Preston  data  factor  of  these  quadratic  for  to  of  production  Preston  turns  the  Nautiyal  two-digit  a  of  most  (1985),  the  INDUSTRIES  technology  that  However,  (1981)  aspects  ALLIED  (1983)  estimated  and  pairs  wood  studied  a long-run as  factor  wood-labour  inputs  were  the  pulp translog  inputs  and  substitutes.  and  in  paper  cost the  capital-energy However,  industry  function  production were the  (SIC  which  specified  process.  complements,  degree  of  He  capital,  reported  while  substitution  1956  other  to  labour, that  the  pairs  between  of  factor  "For the purpose of this study, the paper and allied industries (SIC 27) include pulp & paper mills (SIC 271); asphalt roofing (SIC 272); paper boxes & bags (SIC 273); and other converted paper products (SIC 279).  input and  pairs  was  labour  found  and w o o d  Martinello data  from  factor  substitution and  inputs  -  He  pulp  and  estimated  a  The paper  &  collected  and  1.  the  of  case  available  only  reported  in in  and  energy  using,  reported  relative  estimated  271)  using  annual  that  a result  of  energy, also  decreased  over  the  little  other  was  holding  of  that  period  were  saving  material &  factor  pairs  change,  Nautiyal  observed  there  labour  and  by  four  pairs  technical  capital  and  the  was  specifying  changed  and  this  studied  that  prices  complements  function  material  He  change  of  (SIC  function  technical  as  cost  the  logging  from  Logging  old  1963  the  value  together.  Moreover,  by  and  labour  decreased.  Singh  (1986)  long-run  labour  of  analysis.  'fuel  some  to  the  the  'saw  1960  been  a  of  the  revision  milling  already  industries  and  and  the  shortcomings.  indicated  data  from  the  which  the  value  to  energy'  and and  establishments  industry'  the or  is  in  The  of  problem  Canada  production' and  wood  problems  major  Statistics  according of  of  the  in  Some  section  2.4  here:  onwards.  value of  have  industry,  format  'net  industry,  a number  mention  introduced  Similarly,  to  the  deserve  from  the  prior  for  the  changes  transferred  were  were  shortcomings  others  industry  of  suffer  2). Some  cluded  that  data  industries  the  271)  mills cost  when  also  the  and  translog  and  problems  with  (SIC  long-run  (Chapter  In  He  that:  using,  capital  ANALYSIS  allied  these  materials.  productivities  mills  increased  STATISTICAL  reported  paper  translog  production  wood-capital  and  paper  of  reported  and a  and  and  materials  increased  productivity  of  and  energy,  constant.  further  energy  pulp  estimated  factors  also  change.  studied  and  He  change  energy-wood  productivity  3.2  the  low.  technical  labour,  technical  substitutes.  who  capital,  very  also  1982  between  output  The  to  be  saving  (1985)  1963  inputs:  capital,  to  SIC  1960,  is  that the  'materials'  code  excluded  of  accordance  revised  period  not  which  in  stumpage  are  have  for some  are  1957-62  separately  were  data  in-  reported  included  other  is  reported.  also  since  are  been  in  this  either  reasons.  500 -i  1955  Figure  1960  3.1; Indexes  1965  of  1970 YEAR  Output  Values  of  1975  1980  the Forest  Industries.  1985  195 7 - 8 4  Figure  3,2; Indexes  of  Output  Prices  of  the Forest  Industries.  1957-84  OS  180  •  a '  i  I960  1965  i 1970  r —  :  1975  1 1980  YEAR  Figure  3.3;  Indexes  of  Output  of  the  Forest  Industries.  1957-84  1 1985  PAPERQ  1000  800 O  o cn  600  X Q 2  400-  Legend  UJ O  A LABOURL  QC Q_ 200-  X  ENERGYL  •  CAPITALL  13  MATERIALSL  S  TAXL  1985  Figure  3 4:  Indexes  of  Factor  Prices  for  the  Logging  Industry.  1957-84  CO  500-  400-  o o cn  300-  x LU Q 200O CC  Legend 100 H  A  LABOURW  X  ENERGYW  O  MATERIALSW  B  CAPITALW  ffi TAXW 1955  1960  1965  1970  1975  1980  YEAR  Figure  3.5; Indexes  of  Factor  prices  for  the  Wood  1985  Industries.  1957-84  800  O O  x  UJ  Q  600-  400Legend  O CC  CL  200-  A  LABOURP  X  MATERIALSP  •  ENERGYP  B CAPITALP H  1955  1960  1965  1970  1975  1980  TAXP  1985  YEAR  Figuire  3 6:  Indexes  of  Factor  Prices  for the Paper  & Allied  Industries  o  700  —1 1955  i 1965  1960  1 1970  —| 1975  p1980  YEAR  Figure  3.7; Indexes  of  Factor  Prices  for  the Forest  Industries.  1957-84  Figure  3.8: Indexes  of  Factor  Incomes  in the Forest  Industries.  1957-84  This and  discontinuity  comparability  Canada 1963 of  reported  and  the  These  data  3.1  the  the  1964.  ratios  Table  of  in  data  the  new  Year  reported over  the  in  the  computed  seriously  period  as well  two to  in Table  data  the  old  format  are reported  : The  the  data  data  The  in  in  of  analysis.  as the  new  formats  that  in  affects  were  the  the  However,  format  compared  old  consistency  format  Statistics  for  the  and  the  were  years ratios  ascertained.  3.1.  ratios  for  Employment  standardizing  Wage  data  in the  Material  logging  industry  Fuel  Value-added  613  0~15  0.61  ratio  6~64  (T67  0.65  0.67  0.54  0.15  0.61  0.645  0.67  0.535  0.15  0.61  1963 1964 average  Assuming period to  1957-1962,  the  rest  assumption ue  of  2.  In  corrected the  case  The  of  data  the  for of  for  period  this  it  the  same  this  period  of  analysis.  is  accepted  period  shipment.  was  The  ratios are  for  of  the  'net  in  modified  Though  estimated  value  were  and  for  the  made  entire  comparable  the  limitations  of  this  of  simplicity .  The  val-  against  the  sake  by  force  using  5  regression  value  of  production'  adaptation  of  the  has  been  accordingly. of  the  this  wood  study  first problem  included  average  recognised,  values  quirements a.  are  on  the  of  stumpage  modified also  that  in the  industries,  posed is that  logging  two some  industry  the  data  to  the  re-  problems: of  the  logging  prior to  1960  establishments revision  of  which  were  SIC code  have  Another c o m m o n approach to estimating missing data in a time-series is to regress the available observations on time and to use the estimated trend equation to interpolate or extrapolate the missing values. However, as one of the objectives of this study is to discern time-trends in the relative factor shares, this method has not been followed to avoid a possible bias in the share trends. Only one variable, that is the value of stumpage has been estimated using regression of this variable against the modified value of shipment, a reported variable that does not directly figure in this analysis. The regression of this variable against time has been deliberately avoided. This method has been preferred by many empirical researchers (Johnson Jr., Johnson & Buse, 1987). 5  since  been  necessitated from  the  from against The of  to  energy &  1962 of  are  1957-62.  The  milling  industry  was,  the  by  dividing  is  period the  the  the  a  'factor  logging  This  change  input'  separate  industry.  However, 'stumpage'  prior  to  1963. Therefore,  using  a  regression  natural  only  for  used  the  of  fuel  &  values  and  this  the  variable  energy  sources not and  an  energy  price  this  then  price  as  for  milling  was  types  such  saw  index  by  various  1963-84,  construct  quantity  of  other  period  for  to  energy  and  gas  information  therefore,  of  as  quantities  gasoline,  The  industry.  (valship).  that  relevant  value  of  estimated  is  milling  'stumpage'  reported  shipments  1957-62.  saw  case  available  period  of  the  electricity,  wood  for  in  problem  viz.  the  separately  the value  second  coal  as  is not  1957  to  consideration  'materials'  'stumpage'  b.  transferred  the  shingle index  constructed  index  for  this  period. In  the  case  energy been by  taken  a as  of  for  its  data  downward  Each  bias  of  of  electricity,  logs,  the  as  This use.  not in  is  industries.  Aggregated of  of  and  and  and  and  data  autocorrelation.  gas;  are This  kinds uses and  buildings.  shakes,  paper  output generally study  produced  considerable  is  omitted is  fuel  &  cognizance  a  empirical  for  and  results  used  amount  from  likely  has  the  to  of  study  cause  relating  to  a  this  caution.  different each  data  No  is  omission  The  with  natural  aggregating  energy  unavoidable  example,  which  generates  energy.  employs  reported  purchased.  energy  self-generated  of  the  amount  group  This  machines  shingles  fuel  interpreted  For  petroleum  therefore,  problem  be  products.  that  This  industries,  the  industry  share  industries  equipment,  lumber,  of  available. the  allied  only  amount  therefore,  these  and  include  own  are  must,  variety  such  paper  establishment.  energy  factor  the  consumption  an  since  of  and  each  different different  They and  factor types  types  produce pulp.  factor  found uses  of  to  Divisia  and  of of  energy capital  different  The  major  inputs  in  suffer  from  indexes  produces  goods  types  of  problem,  each  for  such  the  of  these serious  prices  and  quantities  3.2.1  value  of  the  of  materials;  of  has  the  Most the  of  wood  paper  and  industries. constituent  tively,  Statistics  spective  used  of  are  will,  the  counting  constituent  the  value  of  the  in  of  industries  in  and  part  the  6  respective  lies  is the  stumpage ;  aggregating  however,  used  it  by,  the  In  logging as  and  raw materials  of  have other  result this  assumed  wood  in  outputs  therefore,  is  industry  included  for avoiding  with,  Canada  industries.  the  value-added  problem,  aggregation  procedure  inputs  of  energy;  double  The  industries  simple  factor  each  and  activity  output  industries  begin  inputs.  industry  the  value  aggregating  value  groups.  of  the  sum  output  value  of  industries.  industries  avoided. The  To  the  and factor  for  fuel  avoid  7  allied A  to  industry .  of "the forest  of  total  taken  logging  (vship)  value  the  output  OUTPUT  output  the  and  been  OF  of  following:  output  of  aggregated  AGGREGATION  The  Care  of  that  due  words,  no  while and  care  wood  value  of  factor  to  the  'materials'  paper  avoid  double-counting  used  which  double-counting  aggregating  output  the  & allied  is  assumed  as  these  by,  these  the  to  be  follows.  of,  industries  in  the  of  outputs  in  some  and  needs  double-counting is  of  industries  inputs  double-counting of  the  other  and  problem  industries  taken  the  of, in  in  of  and  respec-  these  re-  reported  Stumpage is not part of the value of output for the paper & allied industries. It is, however, part of the value of output of the w o o d industries, because some establishments in the sawmilling industry, which were part of the logging industry prior to 1960 revision of SIC code, are engaged in logging operations and pay stumpage for timber so harvested. 6  Many establishments which Statistics Canada considers part of the logging industry are log 'merchandisers' who buy logs from loggers and sell them to sawmills or pulp and paper mills. If their output is included in the industry's output, the value of their logs is counted twice. Therefore, 'amount paid for purchased w o o d ' and 'amount paid to others for contract work done' are excluded from the value of materials and supplies which form the part of the value of output of this industry. Double counting is, therefore, avoided in the value of output also. This method of avoiding double counting from the output of this industry has also been used by other researchers (Martinello, 1985). 7  data The  on  the  output  wood of  industries  the  logging  pulpwood  and  chips;  output  the  saw-milling  of  and  the  industries  dustry  is used  by the w o o d  the  value  value  of  of  (SIC  allied  value  of  for  outputs the  of  of  the  sum  of  industries, materials  the  in  value  the  in  in  industries  plotted  is  The than  90%  output  all  total of  price  of  industries  the  and  total  of  the  value  (pi)  is  an  logs, of  in  Figure  of  the  27).  output;  identified  in  the  by  the  of  used  the  logging  in-  the  logging  used  subtracted  by,  and  paper  materials  for  the  - value  of  pulpwood  value  and  the  thus  the  &  allied  the  paper  output  and  chips)  and  from  values  the  of  (i.e.  of  the  that  the  of  output  obtained.  forest and  fuel  &  industries  the  allied  industries.  industry,  wood  This,  all  the  of  of  the is  constituent values  of  value  of  the  the of  sum  in turn,  modified  and  output  the  values  industries,  industries, of  in the  allied  value  is  modified  energy  and  The  of  output  modified  and  paper  of  rest  and  from  the  of  the  industry  total  each  activity  of  these  for  more  3.1.  pulpwood, of  (SIC  exported  are  output  of  output  logging  industries.  chips  value  paper  the  is  therefore,  Canadian  the  and  are,  industry  the  and  output  index  the  in  constituent  value  the  purchased  industry  time  of  are  logging  materials  against  25)  and  output  of  the  both  chips  the  materials  values  (SIC  industries  the  the  output  from  (vship)  of  logging  value-added  exported  of  in  Similarly,  industries  wood  the  modified  of  of  industries  materials.  of  output  value  rest  as raw  value  industries  output  The  chips  value  allied  categories:  Pulpwood  the  in these  wood  the  stumpage  of  251).  &  three  the  industries  subtracted  used  the  and  paper  into  saw-milling  the  of  (SIC  materials.  obtained.  wood  value  value  are  is  the  materials  The  and  - value  industries  and  the  of,  27). Thus,  output  materials  the  the  Similarly,  industries  pulpwood in  industries  logging  of  chips  output  industries &  of  as raw  and  is divided  rest.  industry  & allied  value  25)  industry  paper  The  (SIC  the  and  bolts  logging  prices  of  and  poles  industry. logs,  accounts  Therefore,  pulpwood,  and  the  logging  bolts  and  poles .  In  8  the  prices  which  the  case  of  lumber,  account  for  industries.  For  the  the  of  pulp,  prices  The prices  of  plotted these  (p)  of  the  each  of  output these  indexes  Table  11.1 of  3.2.2  the  values or  the  of  and  different  quantity  index  Canada).  construct  desired  For constituent total  natural  Figure  by  industry(ies). price  are  output  FACTOR  used  for  already  types  price  the  of  against for  is  an  index  plywood of  is  of  products  this  (pp)  of  group  an  of  index  of  for  these  the  output  industries  are  (Q)  in  each  of  output  by  output  price  of  output  (qi)  in  for  these  the are  quantities  Figure  of  of  output  indexes  each  index  aggregated  value  time  an  indexes  quantity  3.3.  constructed  of  Output  industries  output  for  values,  are  out-  reported  in  of  These quantity  the  industries.  The  INPUTS  aggregating been  each  constructed  total price  electricity  factor  input  or  number of The and  energy coal.  is  price An  the  2.4  some  the (pe)  index  Second,  other  indexes  as the  case  is  for 2).  are. then may  index  prices  First,  for  of the  index  source  (e.g.  used  to  be.  for  each  compensation  is an  each  a price  reliable  available  total  for  same  (Chapter  aggregated.  employees (w)  is  section  quantity  indexes  of  labour  in  from  or  price  inputs  are  obtained  indexes  indexes  factor  discussed  or  price  employees.  petroleum,  price  is  II.  has  of  industries  (1971 = 100). The  indexes  and  output  output  quantity  dividing  plotted  price  OF  is  The  of  (pw)  paperboard.  output  Indexes  indexes  the  price  veneers  value  forest  The  3.2.  is obtained  example,  number  gas,  (pf)  industries.  in  procedure  Statistics  the  for  Appendix  industries  industries,  price  output  shakes,  the  paper &  AGGREGATION  The  of  and  industries  and  70%  allied  the  and  newsprint,  time  given  industries,  shingles  than &  constituent  the  wood  chips,  paper  industries  using  put  the  the  more  output  against  of  of  of  of  the  divided  the  prices  'materials'  by of  (pm),  This output price index seems to be questionable since most of the firms in the forest industries are vertically integrated and so pricing mechanisms for roundwood are far from the perfect. However, in the absence of any other alternative, this output price index is accepted as the only reasonable choice. 8  constructed 'timber'  by  and  Statistics  'materials'  the  constituent  the  corresponding  Canada, for  each  industries  are  price  is  used  of  the  further  indexes  as  the  constituent  aggregated  for  price  the  index  (1971 = 100)  industries.  into  the  aggregated  The  price  Divisia  factor  for  indexes  indexes  inputs  both  for  for  to  obtain  the  forest  industries.  The dustry), tax  Tax  share  woodtax  (i.e.  paid  by  the  obtained  by  dividing  tax  per  price are:  unit  index (1)  of  are  capital  that  residual  put  of  price.  in  II.7 of  the  data  The  time  the of  Figures  Appendix amount factor  Figures  Appendix  in  II.  (i.e.  inputs  is  is  logging  paptax  (i.e.  total  imputed  price  an  also  for  3.6,  was  3.8,  on  price  income  each  and  inputs  at are  incomes 3.9,  3.10 of  the  and  capital (k)  and  (r)  is  in-  quantity,  that  is  converted  into  a  of  3.7;  the  industries  and  (2)  reported  components  as  outlined  quantity  indexes  on  money Finally,  paid  of  out  each  of  and  3.11;  and  inputs factor  these and  input  as  the  is  the  profit  the  manner  a product  capital  the  value  of  reported  labour) by  its  share the are: in  are  in  is  out(1)  Tables  obtained  corresponding  are: (1) plotted  reported  of  calculated  industries  (2)  (except  industries (2)  in  defined  mid-year.  relevant  3.15;  obtained  for  factor  of  capital  is then  Interest  spent  in each 3.14  durable  k.r).  II. Quantities  3.13,  and  the  output  price  3.5,  by  (ptx)  aggregated  quantity  capital  Factor  quantities  rate  This  3.4,  capital  factor  spent  3.12,  the  paid  industries),  tax  factor  capital  for  capital  industry.  by  tax  II.  durable  other  The  for  total  wood  Figures  for  money  all the  the  aggregating  entire  relevant  Indexes  for  price  II.5 of  dividing  in the  time-series 2.  (i.e.  industries.  indexes  capital  against  II.4 and  A  forest  and  after  the  plotted  time  time-series  by  share  Appendix  procedure  in chapter  the  by  I,  the  time  logtax  industries).  tax  Price  II.3 of  the  quantity  assuming  total  of  paid  allied  of  against  obtained.  discussed  the  sum  tax  &  output  II.2 and  Appendix  (ki)  total  (1971 = 100).  Using in  the  paper  plotted  in Tables  is  Tables  against II.6  and  800  o o  600 A  CD ^  400  X .Ul Q LLJ  Legend  200  o o z cc  o I— o ,<  -200  A  WAGEL  X  MATERIALS!.  •  ENERGYL  B  STUMPL  2  TAXL  *  ?APJTAL_L_  *  -400 1960  Figure  3.9; Indexes  PROFITL  1985  of  Factor  Incomes  in the Logging Industry.  1957-84  4^  vo  1500-1  o o  cn x  1000  500  A  Ld Q  O O or O (— O ,<  Legend  -500 H  -1000  A  WAGEW  X  MATERIALSW  •  ENERGYW  El S T U M P W -1500-^  -2000 1955  1960  1965  1970  1975  YEAR  Figure  3,10; Indexes of  Factor Incomes in the Wood  1980  Industries.  H  TAXW  X  CAPITAIW__  *  PROFITW  1985  1957-84  o  1500  o o cn  1000 A  500 A  O O cc  O t— o ,<  Legend -500  -1000  A  WAGEP  X  MATERIALSP  •  ENERGYP  B  TAXP  H CAPITALP *  -1500 1955  1960  1965  1970  YEAR  Figure  3.11; Indexes of  Factor  1975  1980  1985  Incomes in the Paper & Allied Industries  PROFITP  300  1  1960  r—  1965  i  :  1970  1  1  1975  1980  El  ENERGYL  H  CA PI TALL  1  1985  YEAR  j igure  3,12; Indexes of Factor Quantities  in the Logging Industry.  1957-84  Figure  3.13: Indexes  of  Factor  Quantities  in the W o o d  Industries.  1957-84  u>  Figure  3,14;  Indexes  of  Factor  Quantitites  in the Paper  ft  Allied  Industries  -P-  1  300  -i  '  I  1960  1965  "  l 1970  1 1975  "  1  1  1980  1985  B  ENERGYF  E  CAPITALF  YEAR  Figure  3.15; Indexes  of  Factor  Quantities  in the Forest  Industries,  1957-84  Ul  3.3  GROWTH  Annual put,  factor  TRENDS  growth  using  (Chapter  2).  incomes  may  shares .  Similarly,  factor of  incomes  1  0  .  the  may  be  The  annual  annual  are  reported  rates  Capital Interest Material Energy Stumpage Tax Profit CNVALUE  1  ^CNPRICE  refers refers  to to  annual annual  as  the  of  values  forest  of  of  of  changes  output,  ETRS  -  11.10 15.10 11.00  7.10 4.80 5.50  10.80 6.20  7.40 4.70  inc dec  4.60 -48.00  1.30 -  dec dec  rate  (%/a)  changes changes  real  and prices factor  the  ETRP  forest  price  of  4  inc^  6  in nominal values in nominal  output  3  dec inc inc inc  rate (%/a)  factor factor  output, in  2.3.1  1957-84  8.20  growth  the  are  factor incomes  5.30  growth  and  relative of  values  out-  section  in  in  of  industries  output  prices  of  values  in  changes  industries, 2  PRICES  the  changes  nominal  trends  CNPRICE  1  values  nominal  expected  of  explained  of  trends  the  each  9.40 8.40  ETRS refers to expected trends of ^ETRP refers to expected trends of ^inc refers to increasing trend; d e c refers to decreasing trend; 3  in  in the  CNVALUE  in  in nominal  prices  nominal  trends  expected  the  in the  nominal  infer  growth  Output Labour  the  rates  and  AND  for  form,  growth  3.2.  VARIABLE  prices  expected  in Table  nominal  in  rates  INCOMES  percentages)  factor  rates  growth  prices,  3.2 :: Annual and  to  FACTOR  functional  infer  used  relevant  Table  to  as  and  growth  used  and  industries  output  exponential  annual  be  VALUES,  (expressed  and  an  The  inputs  factors  rates  incomes,  estimated  9  IN O U T P U T  inc dec no' inc dec dec 7  of  relevant  relevant  variable;  variable;  in relevant relative shares; in real factor prices;  6  ^no  refers  to  no  change.  Recall that a relative factor shares is a ratio of factor income to the value of output. For example, if the nominal value of output of an industry grows at a rate of 8% per annum and the share of a factor, say labour, grows at an annual rate of 9%, the relative share of labour is expected to rise over time. 9  Recall that real price of a factor is defined as the factor price divided by the output price. For example, if the nominal price of a factor, say labour, grows at an annual rate of 5% and the nominal output price grows at a rate of 7% per annum, the real labour price is expected to decrease over time. 1  0  The  annual  relevant  prices,  industries  3.4  growth  are  SPECIFIC  On nominal  rates  and  their  reported  basis  factor  the  values  trends  11.14 of  of  of  output,  changes  Appendix  for  factor  each  of  incomes the  and  constituent  II.  HYPOTHESES  of  prices  nominal  expected  in Table  RESEARCH  the  in  the  expected  reported  in  trends  Table  of  3.2,  changes  the  in  relative  following  factor  subsidiary  shares  and  hypotheses  are  proposed:  1.  the  relative  share  of  labour  has  consistently  decreased.  2.  the  relative  share  of  timber  has  consistently  decreased.  3.  the  relative  share  of  durable  4.  the  relative  share  of  materials  5.  the  relative  share  of  energy  6.  the  real  price  7.  the  real  rate  8.  the  real  of of  price  labour return  of  and to  capital has  has  consistently  consistently  consistently  labour  durable  materials  has  has  risen.  risen.  productivity capital  not  risen.  and  have  risen.  capital  changed,  productivity  but  materials  have  risen.  productivity  has  declined. 9.  the  10.  the  real  price  real  price  productivity 11.  the  rate  of  between  of  has  of  energy  timber  energy (that  productivity  is  have  stumpage)  risen.  has  decreased,  but  timber  increased.  change  the  and  rate  in  a relative  of  change  factor in  share  the  real  is  consistent  factor  price  with  the  differential  and  that  in  factor  productivity. 12.  profitability  No However, ascertained  of  the  hypotheses actual and  forest  have  trends the  in  industries  been the  significance  of  has  specified relative  consistently  for  factor  shares  their time  of  variables  declined.  inputs: these will  be  tax  and  factor tested.  money inputs  capital. will  be  4.  4.1  RELATIVE  CANADIAN  FACTOR  Relative industries respective  factor  shares  industries  mean  values  are  of  in  incomes  industries.  these  INDUSTRIES  : EMPIRICAL  ANALYSIS  SHARES  factor  are  FOREST  The  forest  expressed  annual  reported  these  the  as  values  in Tables  shares  for  industries  and  percentages  of  of  the  each  of  the  relative  II1.1, III.2, the  each  of  the  output  factor  shares  constituent  value  for  for  each  111.3, and  III.4 of Appendix  industries  are  summarized  the of  111. The in  Table  4.1.  Table  RELATIVE  4.1  : Average  SHARE  relative  FOREST  1  MEAN  factor  in the  LOGGING  2  VAR  6  shares  7  forest  industries,  WOOD  3  1957-84  PAPER  4  5  MEAN  VAR  MEAN  VAR  MEAN  VAR  Labour  (SL)  30.75  12.99  45.85  5.99  28.31  3.14  23.79  3.37  Capital  (SK)  9.35  10.44  10.43  12.08  4.84  4.88  10.36  14.30  Interest  (SK1)  3.56  2.25  3.36  2.25  3.80  2.53  3.56  1.95  Material  (SM)  39.95  41.98  16.39  21.21  53.04  4.34  47.57  2.80  5.12  1.06  3.82  1.09  2.10  0.35  6.51  2.63  1.65  0.35  8.00  5.56  0.87  0.14  -  -  Taxpart  3.34  1.89  0.99  0.15  2.35  0.76  3.89  3.01  Profit  6.30  39.58  10.36  65.82  4.69  36.61  4.32  43.81  Energy  (SF)  Stumpage  (ST)  (SP)  'RELATIVE SHARE refers to relative factor due to rounding error; ^FOREST refers to the forest industries; ^LOGGING ^WOOD SpAPER 6  MEAN  refers  refers refers  to  to the the the  is expressed  Relative Figures  to  4.1,  factor  4.2,  4.3  logging  wood paper  shares  which  may  not  add  upto  100.00  industry;  industries; & allied  as percentage  shares  for  and  4.4.  industries; (%); ^VAR refers  each  of  these  Deviations  of  to  industries the  variance.  are  relative  plotted factor  against  shares  time  from  in  their  mean III.T,  values III.2,  for  III.3 and  In the significance  for  models  relative  Table  4.2  : The  Capital  RATES  Material Energy  has  IN RELATIVE  squares  (OLS)  techniques.  forest  White  et  have  been  industries:  aL;  unless  been  in  shares  been  plotted  against  time  in  Figures  tested  FACTOR  relative  factor  Trend  parameter  the  statistical  5% level.  SHARES  shares  estimates  in Tables  stated  at the  have  Autocorrelation  1986). The  reported  otherwise  4.2  was  of  the  and  4.3.  estimates  and  been  estimated  corrected trend  summary  using  parameters  statistics  TIME  CONSTANT  R2  RHO  (SL)  0.25  -522.78  0.74  -0.04  (SK)  (-2.53) 0.13  (2.68) -255.04  0.76  0.05  (1.75) 0.17  (-1.69) -325.05 (-3.84)  0.95  -0.01  0.79  0.17  0.83  -0.04  0.78  0.008  0.78  -0.006  0.77  0.01  (SK1)  (3.87) 0.61 (4.14)  (SM) (SF)  Stumpage  -1161.5 (-4.00) -159.23 (-1.92) 106.1  0.08 (1.98) -0.05  (ST)  Taxpart Profit  follow,  trends  Interest  which  parameters  SHARE Labour  have  linear  (Shazam:  factor  results  GROWTH  least  industries  Appendix 111.  estimated  long-term  ordinary  AR/MA  these  III.4 of  the  AND  The  of  econometric  of  4.2 TRENDS  using  each  (SP)  (-7.86) 15608 (4.47)  (7.99) -30457000  -0.53  1053.1  (-3.76)  (3.78)  (-4.42)  't-ratios are in parentheses; for 26 degrees of freedom (df), critical values for one-tailed test are t,.05 = 1.706 and t,.1 = 1.315; SHARE refers to relative factor share, dependent variable in a regression equation; TIME is coefficient of time (%/a), the independent variable; C O N S T A N T is coefficient of intercept term; RHO R^ (see  is  is autocorrelation coefficient section  of  2.3.1).  coefficient  determination  of  the  which  corrected is  residuals;  required  to  be  interpreted  with  caution  Figure  4.1; Relative Factor  Shares  in the Logging Industry.  1957-84  ON  O  60-1  UJ CC <  40-  t/> cc  O (—  o  Legend 20-  >  A  LABOURW  X  CAPITALW  •  INJO?ESTW_  BI MATERIAL SW  _l UJ  H  ENERGYW  X  SJ^MPAGEW  <S> TAXW_ ffi PROFITW  -20 1955  1960  1965  1970  1975  1980  1985  YEAR  Figure  4.2; Relative Factor  Shares  in the W o o d  Industries,  1957-84  60-,  Legend  1955  1960  1965  1970  1975  1980  A  LABOURP  X  CAPITALP  •  1NTERESTP  El  MATERIALSP  ffi  ENERGYP  x  JAXP  *  PROFITP  19E5  YEAR  Figure  4.3: Relative Factor  Shares  in the Paper  & Allied Industries.  1957-84  r o  50-,  ui rr < oo  Legend  or O  i—  o ,<  >  ui rr  1955  I960  1965  1970  1975  1980  A  LABOURF  X  CAPITALF  •  INTERESTF  H  MATERIALSF  S  ENERGYF  X  STUMPAGO;  •  TAXF  ffi  PROFITF  _  1985  YEAR  Figure  4.4; Relative Factor  Shares  in the Forest  Industries.  1957-84  OS  Lo  Table SHARE  Labour  Interest  (ST)  Taxpart  Profit  l-ratios SHARE ble; with  and  (SP)  are refers  to  -0.13  293.97  0.49  0.05  0.038*  -46.83*  (-2.66)  (3.15)  (0.72)  (-0.45)  0.25  -473.29  (2.24)  (-2.19)  (see  0.64  -322.91  0.90  (9.88)  (-9.78)  0.53  -1028.6  (10.66)  (-10.50)  0.90  0.083  -158.68 (-2.20)  -0.1 1  223.04  (-2.64)  (2.75)  0.023  -45.10  (1.83)  (-1.80)  -0.83  1643.70  (-377)  (3.79) for  factor  refers  section that  to  RHO  relevant  -0.16  0.14  0.43  0.75  0.04  (-1.72)  0.17  -338.95  ('2.1)  (-12.0)  0.12  -179.22  (2.83)  -2.18)  0.06  -122.49  (2.79)  (-2.74)  -0.028  55 8 0  (-4.01)  (4.07)  -0.045  91.24  (-2.53)  (2.60)  -0.43  of  freedom  dependent  (df) critical in  in a regression  coefficeint  result  variable  is  not  of  equation; R 2 even  at  RHO  0.13  -0.03  -0.20  0.93  0.40  -0.02  0.69  0.03  0.45  0.08  0.55  in the  for  one--tailed  equation; is  the  TIME  coefficient corrected  15% level.  tests  of  are  R2  RHO  0.59  -0.09  0.70  0.04  0.96  -0.09  0.56  -0.10  0.95  0.13  0.03*  -33.96*  (0.48)  (-0.28)  0.23  -440.53  (2.00)  (-1.95)  0.006*  -35.05*  (0.11)  (-0.31)  0.06  -1 15.77  (2.31)  (-2.19)  —  _  -0.17  335.98  (-6.07)  (6.14)  -0.33  647.02  (-1.97)  (1.98)  t,.05 = 1.706  determination  residuals;  CONSTANT  (-7.31)  coefficient  INDUSTRIES  TIME  -268.73  -0.07  is  ALLIED  0.14  0.08  0.83  &  (7.39)  0.01  (2.47) values  statistics PAPER  0.69  860.01  a regression  autocorrelation  significant  summary  2  R  -412.13  (1.74)  (-2.45)  term is  0.002  0.60  degrees  share,  intercept  2.3.1); the  26  0.26  0.09  0.79  (2.25)  0.21  0.06  and  INDUSTRIES  CONSTANT  a relative  (*) indicates  WOOD  estimates  TIME  parentheses;  CONSTANT  caution  Asterisk  in  INDUSTRY  parameter  RHO  (SM)  Stumpage  Trend  R2  0.17  (SF)  industries:  CONSTANT  (SKI)  Material  constituent  TIME  (SK)  Energy  The  LOGGING  (SL)  Capital  4.3:  of  and  time  which  0.77  0.02  0.70  -0.05  t,.1 = 1.315;  (%/a), the is  _  required  independent to  be  varia-  interpreted  Factor by  the  by  output  cal  productivities  respective price  products).  Appendix shares,  III. real  exponential respective  factor  were input  indexes  to  indexes  Annual  growth prices,  functional  form  regressions  are  quantity  obtain  These  factor  obtained  by  indexes.  indexes  are  of  reported  rates and  (as  real  in  and reported  output  Factor  price  factor  Tables  percentage  factor  reported  dividing  prices  III.6,  annum)  in  III.8,  and  111.8 of factor  estimated  using  and 4.5. The  III.7,  physi-  relative  in Tables III.6,  been  (qi)  deflated  111.7 and  have  in Tables  were  (i.e. marginal  productivities 4.4  indexes  indexes  111.5, per  quantity  details  III.9  of  of the  Appendix  III.  Table  4.4: Annual prices  FACTOR  growth  rates (%/a) of  and factor  productivities  CSHARE  1  Labour (L)  2  1.09**  in the  CPRICE  -0.82  Capital (K)  relative factor  7  3  1.13**  -3.98  Taxpart  -4.89  Profit (P)  -7.74  5  -0.13**  1.51  1.37  DIFF  4  1.00**  Material (M)  Energy (F)  GPROD  -0.86  -  (T)  industries  3.15  5.10  Stumpage  real factor .  2.29  (K1)  Money  forest  shares,  -  -  0.07**  -1.38  1.38  -0.88  2.59  -3.47  -0.45*  1.34  0.00  -4.89  0.89*  6  .  -4.89  ^FACTOR refers to factor inputs used in the forest industries; ^CSHARE refers to the annual growth rates in the relative factor shares; ^GPRICE refers to the annual growth rates in the real factor prices; C P R O D refers to the annual growth rates in factor productivities; DIFF = (CPRICE - GPROD); 4  5  6 Asterisk (*) 15%; and ^Double level.  signifies  asterisk  that  relevant  (**) suggests  that  result relevant  is  significant  result  only  at  is not significant  the  level  even  10%  or  at the 1 5 %  Table  4,5;  Annual  growth  rates  FACTOR  (%/a) of  LOGGING  relative  factor  shares,  real  INDUSTRY  Gshare'  Gprice^  Gprod  factor WOOD  Diff  3  Labour  (SL)  -0.28  1.97  2.24  -0.27  0.07**  Capital  (SK)  1.85  0.40**  -1.78  1.78  1.67*  -  and  factor  productivies  INDUSTRIES  in  PAPER  the &  constituent ALLIED  industries  INDUSTRIES  Gprice  Gprod  Diff  Gshare  Gprice  Gprod  Diff  7  2.52  2.49  0.03  0.07**  2.19  2.26  -0.07  6  0.49"  -1.70  170  1.33*  1.00*  -0.34  1.34  4.64  -  Gshare  4  prices  Interest  (SK 1)  5.22  Material  (SM)  3.23  -1.00  -4.20  3.20  0.22  -0.67  -0.90  0.23  0.02"  0.53*  0.49  0.04  1.80  1.09*  -0.84  1.93  2.68  -0.53»»  -3.16  2.63  1.73*  2.47  0.66  1.81  -1.64  -1.00  0.1 1«*  -1.00  -3.56  -0.67  2.64  -3.31  -  4.50  4.50  0.00  4.50  -2.50  -2.45  0.00  -2.45  -5.36  -5.36  0.00  -5.36  -10.30  _  -7.62  _  _  -6.64*  _  _  _  Energy  (SF)  Stumpage  (ST)  Taxpart Profit  (SP)  FACTOR  refers  to  factor  inputs  used  in  -  each  of  4.90  -  the  -  -  -  -  -  -  -  -  industries;  i Gshare  refers  to  the  annual  growth  rates  in  a relative  Gprice  refers  to  the  annual  growth  rates  in  a real  refers  to  the  annual  growth  rates  in a  Gprod 'Diff  =  Asterisk Double  ( Gprice  -  (•) indicates asterisk  (••)  factor  factor  factor  share;  price;  productivity;  Gprod); that  the  indicates  relevant that  the  result relevant  is  significant result  is  only  not  at  the  significant  10% or even  at  15%. level; the  15% level.  as os  Table RATIOS  4.6:  ES  1  GRF  2  change  in  the  forest  industries  and  the  4  CALES  LOGGING  TECHONOLOGY  5  logging  6  industry.  1957-84  INDUSTRY  GRFS  ES  GRF  GRP  CALES  TECHNOLOGY  >1  3.28  1.89  1.74  L-saving,  K-using  -2.1  >1  4.0  2.0  2.0  L-saving,  K-using  -2.29  >1  4.75  2.56  1.86  L-saving,  M-using  -3.5  >1  6.7  3.1  2.2  L-saving,  M-using  3.25  0.10  L-using,  T-saving  1.4  <1  2.2  3.1  0.7  L-using,  T-saving  RLT  2.99  RLF  -2.41  >1  3.22  1.57  2.05  L-saving,  F-using  -2.2  >1  3.8  2.3  1.7  L-saving,  F-using  -0.23"  >1  1.41  1.02"  1.38  K-saving,  M-using  -1.3*  >1  2.8  1.3  2.2  K-saving,  M-using  RKT  4.29  <1  -2.72  1.79*  -1.52  K-using,  T-saving  3.2  <1  -2.0  1.3  -1.5  RFK  0.75"  <1 - 0 . 3 1 "  0.81"  -0.38  neutral  0.02  <1  1.0  1.0  1.0  -  -  -  RKM  <1 0 . 3 2 "  9  K-using,  T-saving  neutral  - -  RMT  5.73  <1  -4.83  0.77  -6.27  M-using,  T-saving  -  RMF  0.34"  <1  -1.49  -1.68*  0.89  M-using,  F-saving  1.4  <1  -3.1  -2.8  1.1  M-using,  F-saving  RFT  5.13  <1  -3.2 1  2.37  -1.35  T-saving,  F-using  3.3  <1  -1.3  2.8  -0.5  T-saving,  F-using  RATIOS GRFS ES  refers  refers  refers  substitution  to  to  to  ratio  the  of  annual  elasticity  of  one  to  refers  the  annual  growth  of  return  to  Asterisk Double  in  share  a ratio  deduced  in  of  to  another  relative  accordance  For  factor with  example  RLK=SL/SK-  shares;  proposition  II (chapter  2);  R  CALES  refers  to  calculated  elasticity  of  (GRF/GRP);  refers  real  factor  rate  substitution  GRF the  relative  growth  GRP  q  technical  INDUSTRIES  GRP  3  &  8  -1.56*  RLM  •  substitution  FOREST  RLK  4  factor  7  GRFS  2  Possible  rate  the  annual  (•) indicates asterisk  that  (•*) refers  growth capital the  rate  rate  in  (w/r);  relevant  indicates  a ratio  in a ratio  of  of  ^TECHNOLOGY result  that  the  is  factor  factor  refers  significant  relevant  inputs. For  prices.  result  For  to  at  the  the is  not  example,  the  example,  the  bias  technical  10% or  of  annual  annual  growth  growth  change  as  rate  rate  in  the  in ratio  deduced  in  of  factor the  ratio real  accordance  K/L; labour  with  price  to  proposition  III;  15%level.  significant  even  at  the  15% level.  ON  Table  4.7:  Possible  factor  substitution  RATIOS  WOOD GRFS  wood  industries  and  the  4  CALES  PAPER  TECHONOLOGY  5  paper  &  &  allied  ALLIED  industries.  1957-84  INDUSTRIES  GRFS  ES  GRF  GRP  CALES  -1.70*  >1  2.50  1.30*  1.90  L-saving,  <1  1.90  1.90  1.00  neutral  6  TECHNOLOGY  2.81  1.51  L-saving,  K-using  RLM  -0.13  >1  3.53  3.21  1.10  L-saving,  M-using  RLT  3.66  <1  0.16"  3.21  0.05  L-using,  T-saving  RLF  -2.56  >1  5.98  3.37  1.77  L-saving,  F-using  -2.10  >1  1.60  0.50"  2.50  L-saving,  F-using  RKM  1.84*  <1  -0.76  0.94»  0.81  K-using,  M-saving  1.60*  <1  -0.60  1.00*  0.60  K-using,  M-saving  RKT  5.30  <1  -4.53  0.94*  -4.82  K-using,  T-saving  -  RKF  -1.52  >1  1.68  1.09*  1.54  F-using,  K-saving  RMT  3.78  <1  -3.78  0.00  <1  M-using,  T-saving  RMF  -2.29  >1  -2.46 - 0 . 3 0 "  8.20  T-saving,  F-using  RFT  5.81  <1  -21.13  T-saving,  F-using  ES  refers  refers  refers  substitution  to  to  to  ratio  the  of  annual  elasticity  of  6.34 one  to  refers  the  annual  growth  of  return  to  Asterisk Double  factor  rate  substitution  refers  real  relative  in  share  a ratio  deduced  in  of  to  another. For  relative  accordance  factor with  0.20"  9  -  -  -  -  <1  0.80"  -  1.00  • -  -2.00  example,  -  -  - -0.60  -  neutral  - -  -2.00  -  -  - -  -1.60*  -0.40  >1  -  K-using  0.20  -  M-using,  F-saving  - -  RLK=SL/SK;  shares;  proposition  II (chapter  2);  CALES  refers  to  calculated  elasticity  of  (GRF/GRP);  GRP  the  -0.30"  growth  GRF  g  the  4.25  RATIOS  Q  in  INDUSTRIES  GRP  3  change  >1  -1.65»  ^GRFS  4  GRF  2  technical  8  RLK  J  ES  1  &  rate  the  annual  (•) indicates asterisk  that  (••) refers  growth capital the  rate  rate  in  in  (w/r);  relevant  indicates  a ratio  a ratio  of  of  "TECHNOLOGY result  that  the  is  factor  factor  refers  significant  relevant  inputs. For  prices.  result  For  to  at  the  the is  not  example,  the  example,  the  bias  technical  10% or  of  annual  annual  growth  growth  change  as  rate  rate  in  in  the  ratio  deduced  in  of  factor the  ratio real  accordance  K/L; labour  with  price  to  proposition  III;  15% level.  significant  even  at  the  15% level.  oo  4.3  POSSIBLE  By shares have  dividing  have been  been  and  details  III. The  reported  in Tables  ing  values  used  to  factors  industries. and  those  of  change  The of  values  substitution  (ES)  summarized  in Tables  light  of  Ovaskainen  empirical the  with  in  in the  with  have  of  those  relative  factor  factor  prices  of  in  these  ratios  annum)  have  been  111.10,  for  the  111.11,  111.12,  above  ratios  (chapter  proposition  been  rates used  factors with  of  substitution II  growth  various  have  been  determined.  and  111.13  mentioned  ratios  of are  so  relative between 2);  the  calculate  as  to  (2)  shares  the  in  of  factor  the  verify  the  II. These  have  correspond-  2),  ratios  to  proposition  two  and  III (chapter in  factor  bias  each  of  of the  quantities  elasticities  of  elasticities  of  results  are  also  4.7.  reported  research with  for  proposition  accordance  and  results,  (1986) and  Tables  ratios  and  trends  per  rates  annual  between  specific  in  possibilities  prices  4.6  temporal  rates  growth  the  deduced  another,  quantities  growth  accordance  factor  (CALES)  reported  (1) the  of  factor  (percentage  annual  annual  in  by  CHANGE  4.7.  accordance  substitution  The  and  deduce:  in  technological  4.6  TECHNICAL  shares  of  rates  are  of  factor  Exponential  growth  values  AND  Ratios  obtained.  regressions  Appendix  been  relative  obtained.  annual  of  The  SUBSTITUTION  one  similarly  estimated The  FACTOR  those  in this  hypotheses for the  chapter, and  Canadian  will  now  compared  be  interpreted  with  manufacturing  the  sector.  in  the  results  of  5.  5.1  INTERPRETATION  The each  of  mean  the  relative  is  dominate  the  industries,  except allied  for  per  labour  from  annum)  zero in  of  the  case  of  stumpage,  rate  in  seem the 1  light  5.1.1  of  relative the  has  Therefore, is  is,  the  Table  each  4.2  for  and  of  forest  4.1,  are  these  logging  and  of  shares,  industries  indicators  sectors.  industry,  real  in  with  the  shares  in  in  support each  and  of  the  For  example,  whereas  materials  hypotheses  annual  growth  as  prices  and 4.4  rates  factor 4.5.  shares  in  principal  these  are  between  that  the  in the  in  each  from  the  not  are  zero &  significantly  (as  percentage  productivities Except each  in  of  annual  The  of  paper  corresponding  hypothesis.  industries  in  different  and  factor  difference and  shares  materials  inputs  Tables  the  of  and  factor  relative  price  factor  significantly  labour  factor  change  results  are  The  real  factor  relative  these  reported  consistent  the  4.3,  15% level.  of  research  in  the these  growth factor  changes  interpreted  in  in  in the  follows.  INDUSTRIES  results,  decreased  reported by  Hypothesis  accepted.  the  rates  these  in  the  industries,  been  factor  specific  FOREST  The (SL)  That  shares  studied.  have  corresponding  productivity . individual  be  in  parameters  at  in  parameters  factor  the  to  input  wood  even  industries  DISCUSSED  factor  inputs  in Tables  trend  relative  each  industries  trend  the  The  :  summarized  factor  industries  of  in  relative  factor  reported  industries.  different  the  other  estimates  the  industries,  dominant  in the  The  of  constituent of  RESULTS  RESULTS  values  importance  labour  these  OF  EMPIRICAL  Real  in  0.82% 1 that  labour  price  Table per  the  4.4,  annum, relative  and  labour  suggest which share  of  that is  the  relative  significantly labour  productivity  has  have  share  different consistently  increased  by  of  labour  from  zero.  decreased 2.29%  and  1n the case of stumpage the rate of change in the relative share is significantly different from the difference between the rate of change in stumpage rate and that in timber productivity. 1  3.15%  per  Therefore,  annum  respectively.  Hypothesis  6  that  Both  real  these  labour  price  results and  are  labour  statistically  productivity  significant.  have  risen  is  accepted.  The labour  net  productivity  is positive edge  in  relative 11  productivity  suggesting the  use  share  that  rate  relative  rate  of  has  consistently  has  3.56%  rate  risen  The of that  the  However, share of  of  this this  This than  can  offered:  relative  stumpage  is  is  significantly  significant but  between  timber  the  rate  price  maintained  rate  (i.e.  their  accounts  only  This  raises  the  question:  a very  be  of  factor  declined 2  that  at  the  Hence, has  in  how  with  that  in  the factor  Timber  Hypothesis is  is  the  use  of  a  3.98% for  10  that  an  real  and  positive this  of  that  implying  factor  input.  decline  the  difference share  at  productivity  productivity  3.47)  relative  timber  accepted.  =  the  of  decreased  zero.  of  significant  share  has  accepted  can the  relative  timber  out  is not  in  in  Hypothesis  statistically  increased  in  (-0.88)  3.47%  decline  decline  consistent  a  rate  2.59%.  11  the  and  0.86%)  competitive  Hence,  price  from  -  for  in  in  relative  the share  between this  the  input  (i.e.  explained?  complex  undertaken  is  increase  for  Hypothesis  0.41)  share  competitiveness  the  rate  0.82%.  different  2.59  Hence,  theoretical  is  productivity  of  =  a comfortable  that  stumpage  of  increase  labour.  has  Hypothesis  of  3.15% - 2.29%  accounts  real  of  Real  is  rate  also  factor  the  (ST)  the  maintained  rate,  share  accepted.  which  timber  in  input.  =  be  a  relative  which  difference same  Hence,  declined,  real  the  is  of  decreased  difference  and  - 3.47  for the  have  the  change  of  annum.  industries  stumpage.  observed 3.98  in  almost  rate  share  has  This  the  difference  decrease  input.  between  price,  industries  in  statistically  rate  labour  change  0.88%,  a  real  difference  of  per  of  at  stumpage  by  is accepted  The  in  labour  labour  between  productivity  that  (i.e.  that these  of  of  the  difference  annual  and  gain  in  question  this  thesis.  which  needs  However,  two  to  be  analyzed  possible  in  more  explanations  detail  can  be  It is  likely  the  rate  that: they  determine  That  the  of  1.09%, changes  in  is  the  real  different  1.00%  the  the  facts  accordance the sults  trend have  that: with  (i)  parameters been  the  of  used  to  case,  of  from  rent  that  accepted  Crown  is 'true'  return at  to  stumpage  even  at  capital  and  the  15%  level,  (except reported  relative spite  factor of  the in  their  per  Table  share  the  the  one  to  to  rate  the  some  paid  by  through  these  likely  industries  deliberate  to  social  relinquished  distributional is  various  depressed  forest  voluntarily  at  15%  former annum.  for  an  policies.  be  less  annual  level.  productivity  capital  3.2;  and  are statistically low  allowed  economically  risen  capital  0.13%  been  than  rent.  has  to  by  in  subsidize  (SK)  at  investments,  probably  economic  stumpage  2  meet  has  paid  thesis .  provided to  of  capital  decreased  in  share  significant  results  this  there  in order  durable  expectations for  the  'reported'  zero  having  be  been  had  in this  communities  have  not  stumpage  encouraged  stabilize  they  statistically  these  the  rate  economic  rate  latter  the  incentives  the  share not  than  that  stumpage,  significantly and  is  cases,  of  actual  have  have  forces  the  order  so  market  (ii)  governments  various  if  concerned  and/or  more  in  'true'  relative  which  levels,  that  is,  these  share  The  paid  If this  of the  'true'  have  regions  obligations.  In either  would  declined  likely  these  part  industries  instruments,  regions. in  has  also  policy  forest  stumpage  industries It is  (i) the  level  of  rate  Similarly, are  having However,  both  increased in  the  the not by  view  of  are  in  estimates  of  productivity) (ii)  of  significant;  these  significance . 3  re-  Hence,  Recall that an index for prices for 'materials (pm), constructed by Statistics Canada, is used as the price index (1971 = 100) for 'timber'. This has been accepted under the assumption that the forest industries face perfectly competitive factor markets, that is, prevailing factor prices are the competitive market prices. This assumption is highly questionable in the case of timber input. 2  The scatter diagrams for the relative capital share and rate of return to capital respectively suggest wide variations. It was, therefore, theorized that these two variables had widely varied during the period 1973-84 due to the two oil-shocks of 1973 and 1979. Consequently, there seem to be two time-series: one for the period 1957-72, and the other for the period 1973-84. To test this premise, a dummy variable was introduced into the regression analysis for the variables: relative capital share, real rate of return to capital (i.e. real capital price), and capital productivity. This rendered the coefficient of the variable 'time' and that of the 'dummy' variable statistically significant at the 5% level. Hence, the premise was 3  Hypothesis  3,  that  the  accepted.  The  first  part  risen,  also  is  productivity  the  of  cost  pressure  rise  by almost  is  statistically  materials annual level.  has  rate  Hence,  materials of  0.00  materials  this  factor  statistically  0.89% Both  rate,  these  has  rate  of  consistently  of  return  to  risen, capital  is has  this  Hypothesis,  that  capital  alternative  Hypothesis,  that  capital  - 1.00  =  pushed  1.09%  per  capital  productivity  - 1.13) the  is  and  negative  relative  share  annum. Therefore,  that  in  suggesting  of  capital  Hypothesis  11  to is  capital.  (SM)  has  declined,  Real  significantly  declined that  risen  the is  has  1.51%  4,  accepted.  of  1.51%  the  materials  from  zero  significant  materials  rate  has  pressure  on  these  materials'  annum.  Hence,  at  an  15% per  changed,  but  gain  (i.e. in  share  Hypothesis  of  1.38%  industries  relative  share  at the  of  not  productivity  annum,  declined  even  net  the  per  relative  The  caused per  of  different  price  cost  that  price  at a statistically real  implying  at a rate of  Hypothesis  accepted.  is not  pressure  in  11  -1.38  the  to is  rise  use by  accepted  input.  in  significant.  per  real  change  pressure  is  is  is  of  Hence,  risen,  that  the  -0.13  materials  negative  This  increase  consistently  of  8,  same  The  of  Hypothesis  input.  the  share  has  is  (i.e.  that  which  has  the part  and  rate  rate,  productivity  -1.38)  the  significant.  0.07%,  productivity =  almost for  of  capital  accepted.  capital  consistently  Materials  annum.  share  that  second  industries. This  relative  durable  7,  rejected  is  to  same  relative  the  between  the  the  for the  The which  on  of  Hypothesis  is  return  share  But  declined,  difference  real rate  accepted  risen,  has  The  of  accepted.  has  productivity  relative  risen annum  is  relative  Therefore, accepted.  and  results  the  energy  are  share  Hypothesis The  real  5  price  productivity  statistically  of  has  significant  energy that of  (SF)  by  the  relative  energy  has  declined only  at  at  an the  1.37%  per  share  of  increased annual 15%  at rate  level.  annum energy a  rate  of  is has of  0.45%.  However,  (cont'd) accepted and the simultaneous occurrence of the problems of autocorrelation and heteroscedasticity was suspected. As there is no satisfactory way to deal with both these problems simultaneously in the type of analysis undertaken in this thesis, the results are corrected only for the problem of autocorrelation. 3  introduction  of  coefficients nificant low  at  level  a both  the  variables:  the  5%  level.  Hence,  of  significance.  price  energy  productivity  has  productivity  risen,  difference  energy  pressure  has  on  these  relative  share  of  annum.  Hence,  Hence,  consistently  declined,  a statistically  per fully of  These  results  are  real  tax  decline  in  rate in  governments favourable  4  5  increases  The  term  As  defined  in  tax  the  of  rendered  the  regressions,  sig-  in  spite  of  their  9,  that  the  real  Hypothesis,  that  this  hypothesis  that  productivity  and  energy  rate  5.10%  and  share  a tax  of  the  is  input. the  negative.  This  same  7.74%  real  share  amount,  which  of  the  has  that  cost  caused  the  1.37%  per  is  which  forest  money  rate The  this  is  is  statistically  industries  capital  factor  with  the by  share  which,  both  5  has  in  declined  decline  zero  relative  structure  implies  in  input.  in  tax  consistent  the  pressure  per annum,  of  This  that  has  increased  annum.  significant.  is  in  energy  -1.34)  this  per  relative  and  in  in  input. rate  effect,  4.89%  the  real  tax  rate  That  is,  the  rate  in  the  of  change  definition.  of  by  The  taxes  also  has  been  consistent  suggest  that  progressively  industries.  to  the  real  the  part  alternative  profitability  statistically  the  provided  rate  rate  'profitability' for  both  Hypothesis  of  relative, share  productivity,  Compared less  The  in  these  analyses  accepted  for this factor  that  and  tax  the  almost  12,  tax  real  of  =  of  by  relative  have  to  use  the  the  part  decline  0.89  a rate  taxes  in  of  at  rate of  decline  been  second  and  is accepted  accepted.  of  the  -  rise  Hypothesis  share  explains change  to 11  significant  the  rate  in the  relative  annum.  the  declined  is  But  in  have  first  rejected  -0.45  input  Hypothesis  significant.  The  (i.e.  has  'dummy',  results  the  regression  accepted.  industries  Profitability"  at  is  the  and  these  is  between  this  'time'  accepted.  risen,  price  into  Therefore,  is  has declined  The real  variable  of  energy  the  dummy  is  of  of  return  here  purpose  increase  of  in the  to  capital  defined  as the  this  study  real  labour  (1.00%) relative  price  and  that  share  of  (2.29%), of  the  profit.  there  real  are  energy  price  (0.89%).  productivities On  the  for  other  a decrease these  The  real  the  the  materials,  labour  productivity  real  observations,  stumpage  it seems  the  factor  inputs:  and  labour  input  comparatively inputs  has  as  has  significantly  capital  significantly  have  infer  that:  energy,  and  capital  consistently  increased.  productivity  to  changed.  has  have  declined.  However,  increased.  been  Also,  despite  In view  increasingly  of  used,  reduced;  labour  capital,  not  and  timber  reasonable  been  has  energy,  rate,  materials,  costly  such  price  factors:  hand,  in  materials  has  been  energy,  progressively  and  materials  substituted  in  order  to  by  other  maintain  factor  industrial  competitiveness; decrease timber  in input  decline. is  in  to  changes  fact, in  labour-timber,  substitution,  have  saving,  also  and  may  indicate  capital,  should  timber  be  in  4.6  to  be  and  mix  of  and  use  of  II (i.e.  (CALES). change  energy  The in  using.  the  pulp  such  are  The  between  factor Factor  elasticities in  inter-temporal these  as  chips.  materials-energy,  ES),  to  observed  capital-materials.  The  the  risen. It  inferences.  substitution and  of  has  factors  these  substitutable.  proposition  use  productivity  However,  capital-energy,  easily  technical  timber  a  for  the  productivity  support  labour-materials,  substitution  materials  to  possibilities  with  that  cause  standards;  materials-timber, not  cause  productivity.  Table  suggest  to  timber  attributed  utilization  accordance of  expected  expectations,  labour-energy,  found  be  turn,  in  reported  elasticities  shares  in  these  close  shares  been in  would  rise  capital-timber,  deduced  factor  to  this  on  factor  calculated  timber  contrary  labour-capital,  timber-materials  and  This,  results  relative  pairs:  relative  increase.  productivity  the  pairs:  the  rate  policies  input  with  stumpage  explain  timber  government  In  to  In fact,  difficult  rise  real  and of  agreement changes  industries  is  in  labour  5.1.2  LOGGING  The (SL)  has  results,  1,  and  labour  labour  productivity  annum  The  the  0.28%  per  factor  share  real  have  price  in  the  and  has  rate  - 1.97  =  is  that  6,  share  of  labour  significant.  accepted.  significant  the  in  rates  real  labour  is positive  use  of  and  this  Hence,  Real  of  labour  1.97%  and  price  and  and  that  labour  by  almost  that  the  rate  11,  between  productivity,  productivity implies  input.  share  difference  in factor  decreased,  increase  labour  the  relative  ;  of  Hypothesis  the  statistically  Hypothesis  0.27)  in  is  statistically  accepted.  the  with  that  at  that  which  share  risen  relative  Hence,  suggest  Therefore,  between  consistent  price  labour  is,  2.24  4.5, annum,  competitiveness  annum.  factor  per  have  risen  (i.e.  decline  is  0.28%  respectively.  maintained  explains  Table  relative  difference  real labour has  the  in  productivity  per  try  by  that  2.24%  in  reported  decreased  Hypothesis price  INDUSTRY  This  the of  the  rate,  change  in  of  for the  indus-  difference  same  rate  is accepted  that the  also  that  a  is  relative  change  in  the  relative  share  of  annual  rate  of  relative  share  of  declined  at  labour.  The  relative  1.64%, which timber a  has  the  consistently  0.11%  15%  level.  timber  has  The  the  The  has  not  is  of  question,  per  is  is  Real  part  of  However,  and  second the  the  has  timber  different 10  ;  the  an  stumpage  of; Hypothesis  But  at  2 that  significantly  from  that  part  of  alternative  productivity zero  even  at  real  rate  of  the  this  has  Hypothesis  hypothesis  that  that  timber  accepted.  the  rate  of  change  -1.00  - 0.00  =  timber.  Hence,  Hypothesis  however,  rate  annum.  not  rejected  decreased  Hypothesis  accepted.  first  is  has  Hence,  accepted.  between  (ST)  1.00%  the  risen  (i.e.  is  which  changed  difference  share  of  annum,  decreased  productivity  relative  input.  has  significant.  rate  Therefore,  productivity  productivity  timber  per  stumpage  declined  significant  by  stumpage  of  is statistically  statistically  risen  share  is:  how  -1.00)  can  the  does 11  in  real  not is  timber  fully not  difference  price  and  that  in in  explain  the  decline  accepted  for  this  between  the  factor  observed  and  the  theoretical  = 0.64)  be  in  The is  durable  capital  the  which rate  is  0.40%  is no  of  alternative  that  the  turn,  pushed  statistically  by  1.00%  nificant. not has  declined  productivity  The in  real  pressure  the  is  has  on  Real  annum, part  of  rejected  and  the  declined,  The  is  (i.e.  1.64  have  -  1.00  already  been  industry  (i.e. in  of  in by  to  materials  price  alternative  -1.78)  is  the  use  of  Both 8,  alternative  is  these  that  the  hypothesis  part  of  zero of  that  even 1.78%,  the  real  is  that  Also,  the  rejected  and  negative. This  suggests  capital  This,  input.  rate,  that  share  of  of  results  are  price the  of  real  Hypothesis,  is  in  1.85%  capital.  3.23%,  relative  productivity  real  this  has  accepted.  same  that  of  hypothesis  risen,  relative  its  share  is accepted.  materials'  and  7,  annum,  capital  rate  declined  that  to  annual  at an annual rate  4  Hypothesis  relative  from  has  the  per  different  capital  for the  Hypothesis  respectively.  the  Hypothesis  the  almost  1.89%  return  an  of  of  which  share  have  has  declined  statistically  sig-  materials  has  materials that  price  materials  accepted.  between  price  that  =  increased  second  3,  at  has  -0.00  up  rate  productivity  is accepted  (SM) has  accepted.  return  pressure  11  Hence,  and  -1.78  share  Hypothesis  rejected  productivity  cost  relative  part  of  a  significantlly  declined  capital  (i.e.  first  difference  the  gain  accepted.  materials  input  question  rate  first  rate  that  capital  share  has  is  at  Real  not  the  in real  experienced  is  is  this  this  Hypothesis  is  Hence, risen,  that  4.20% per  Hence,  changed  has  significant.  and  which  Hypothesis,  relative  risen  of  to  risen  accepted.  productivity  change  annum. Therefore,  consistently  annum,  capital's  Materials' is  is  productivity  the  has  increased,  hypothesis  industry  (SK)  Therefore,  capital  this  net  share  explanations  capital  significant.  significant  part  relative  significant.  Capital  to  the  possible  of  per  statistically  The  per  share  level.  in  5.1.1.  has  return  second the  by 15%  of  there  section  relative  decline Some  statistically  increased at  of  explained?  suggested  which  rate  the  rate  -4.20  -  the  use  of  change  (-1.00) of  =  materials.  in  materials  -3.20) This  is has  productivity  negative caused  and  implying the  that cost  materials'  relative  share  Hypothesis  11  The which  is  annum  at  a  share  of  9,  However,  risen,  is  the  on  the  10.30%  try  has  has  per  the  The 4.50%,  consistent in  tax  relative has as  by  is  with  follows.  has  3.23%  per  level.  0.84%.  annum.  Hence,  rate  1.80%,  is  pushed  per  productivity  has  5,  The  energy  -1.93)  the  part  at  the  of 10%  productivity has  for  this  share  of  Hypothesis  that  first  productivity  relative  Hence,  1.09%  accepted  that  =  the  is  of  by  Hypothesis  accepted.  energy  -0.84-1.09  price  Energy  increased,  that  annual  Hence,  Hypothesis,  1.80%.  an  energy  10%  has  at  real  risen,  this  (i.e.  is  of  11  declined  input this  is  has is  implies  input  up  accepted  for  the  has  rest  of  12,  accepted.  The  taxes  4.50% That  difference is  declined  Hypothesis  (taxpart)  significant.  of  which  has  that  at  a  statistically  profitability  relative  in  significant  the  logging  share  of  money  increased  at  an  rate  indus-  capital  (SK1)  annum.  of  taxes.  taxes  industry  is  per  rate  of  the  in  and  Hence,  share  productivity,  declined  of  price  gain  this  statistically  share  share  in  5.22%  significant  relative  rate  of  in  the  hypothesis  that  declined,  relative  statistically the  (SP)  annum.  which  part  industry rate,  at  energy  is  share.  consistently  increased  real  that  increased  consistently  productivity  Profitability of  has  has  increase  only  alternative  same  relative  The  rate,  input.  (SF)  significant  second  and  Negative  pressure  energy's  the  same  energy  significant  energy  rejected  almost  of  significant.  that  level.  the  for this factor  statistically  share  accepted.  almost  is accepted  statistically  Hypothesis  by  by  statistically  declined  cost  rise  relative  is  relative  to  per  is,  zero  the  rate  the  under  increased  Real  tax  annum,  the  between  has  the  only  industries.  which  of  rate  rate  of  the  This  fully  change  in  change  definition  in  has  of  logging seems  annual  also  increased  explains the in  tax  the  relative  real rate.  industry,  anomalous  rate  tax  of  at  a  increase  in  tax rate  share  is  and  that  Interestingly,  the  while and  is  the  same  explained  For taxes  the  other  tax.  Over  purpose  time,  tax  as  the  share  has  declined  part  of  of  the  factor and  in  and  more  and  in  the  corporate  logging  suggest  materials;  labour  capital  timber  have  and  substitution  according  factor  shares  labour  and  timber  and  declined.  This  study,  and  other  amongst  the  and  capital  and  rest  of  factor  and  the  capital,  productivities  not  firms  were  which  the  most  by  of  subject  time,  the  income  of  to  vertical  sector.  were  as  corporate  while  firms  and  operated  way  corporate  over  tax  personal  earlier  sector  grown  income  include  became  into  has  in  pairs:  bias  for  inputs and  suggests substitutes,  and  (ii) the  capital  The  of  the  Hence,  this  share  already  that:  the  capital  and  degree  capital;  labour  the  degree  of  bias  energy  and  materials  (except  that  in  timber  of  technical  using;  (iii)  of  and  the  productivity)  are  and  and  energy  and  elasticities of  of  substitution  this  in  relative  industry  (i) energy technical  (iii)  being  estimated the  and  is  are  wood  change  timber  energy  is labour  in  labour  using.  materials;  change  relative  labour  substitution  substitution  in  changes in  technical  capital;  calculated  (ii)  and  of  pairs:  energy;  industry:  using;  and  Factor  change  substitutes;  (i)  and  elastitities  energy  logging  the  the  bias  changes  inter-temporal  and  wood  The  and  technical  were  the  labour  The  with  materials  that  energy  labour  materials, pairs;  the  4.7.  materials.  substitutable.  ES).  and  between  and  energy;  II (i.e.  other  Table  agreement  capital,  however, are  and  general  reported  capital,  capital  easily  that  in  substitution  and  found  substitutions  reported  for  materials  all  factors  input  are  proposition  (1985)  and  industries in  corporate  corporate  integrated  inter-factor  energy;  indicate  labour-saving,  all  and  to  complements  were  possibilities  saving; and  Martinello  which  these  industry  are  also  firms,  way,  possible  been  (CALES)  do  the  industries  timber;  not  Taxes  into  this  only  world.  regarding  the  tax.  brought  logging  other  include  logging  they  the  taxes  excise  In  when  shares  deduced  were  study,  more  integration. and  in  timber;  were  tax  taxes  Results change  sales  firms,  horizontal  income  this  than  unincorporated and/or  of  was  productivity complements being  higher  and  energy;  labour less  between  and  timber-saving;  changes same  in  the  factor  direction  as  reported  by  reported  5.1.3  Martinello  by  Martinello  WOOD  The (SL)  has  zero  even  labour the  results,  at  is  also  labour  price  2.52%  and  labour  productivity  and  of  that  per  (i.e.  by  labour  the  relative real  an  in their  the in  where  share  of  labour.  annual  in this  share  price  and  relative statistically has  is consistent labour  share  rate  of  0.67%,  is  the  the  productivity,  as  study.  not  relative  at  the  of  15%  changed.  the  level.  Hence,  decreased, has  risen  at  hypothesis  6  share  significantly  coefficient  share  have  real  labour  labour  not  is  the  labour  different  from  time  variable  This  implies  is  that that  and  the  accepted.  Real  significant  real  for  1,  rejected  changed  that  of  Hypothesis  statistically  2.52 use  = of  labour  labour  its  with  the  Hence, is  rates price  per  of  of and  In  in  of  product.  the  rate  between  That  this  of  the  is,  the  amount  of  of  input  explains  change  rate  net  labour  factor  This  is  words,  real  optimum  product  The  other  increase  the  2.52%  annum.  productivity.  used  that  difference  is  any  physical  11  in  change  the the in  accepted.  (ST)  has  declined  Hypothesis  accepted.  timber  that  physical  Hypothesis  rate  negligible.  labour  average  annual  2.49%  is  have  marginal  an  of  so  in  industries  to  at  -0.03)  increase  the  declined, while  price  productivity  stumpage  significant.  consistently  which  relative  productivity  of  that  consistently  wood  relative labour  suggest  significantly  same  the  level  in  equal  stumpage  timber  accepted.  was  is  in  established  4.3,  Hence,  price)  The  decline  significant  has  labour  labour  which  Table  not  is  2.49  adjusted  firms  at  risen  increase  profit-maximizing  constant  be  4.5,  productivity  an  balanced  real  the  annum,  labour's  increase  have  ln  has  the  gain  input  per  annum.  have  by  entrepreneurs  (i.e.  not  Table  labour  labour  2.49%  productivity  is  (iv)  statistically  labour  hypothesis  offset  0.07%  not  of  share  However,  in  15% level,  share  relative  price  by  the  share  almost  could  reported  increased  alternative  (1985),  and  INDUSTRIES  relative  the  (1985);  Real  productivity  2,  by  that  stumpage has  3.56%  the  per  relative  rate  has  increased  by  annum, share  declined 2.64%  of at per  annum. real  Both  stumpage  The that  the  input.  this  relative  II.8 of  share  of  has  accepted  3,  The  outcome. annum.  change  in  of  a  Table  be  share  (SK) at  are  spite  share  the in  risen  with  at  the  trend  statistically  of  the  rate  of  has  of and  given  in  in  at  per  view  of  reported  in  for  significance  share  1.67%  However,  significant  factor  input.  expectations  capital  this  been  factor  a  implying  observed  have  the  accepted.  relative  parameters  low  durable  the  this  is  that  positive  use  between  15% level.  its  is  stumpage  has  of  of  of  in  for  10,  increased,  3.31)  decline  of  the  estimates  4.3,  in  =  accepted  accordance  first  rate  variable  and  For further explanation,  a  alternative to  capital  capital  capital  the  the  relative  5% level;  level .  Hence,  6  consistently  rate (i.e.  footnote  increased even  significant  that  the  has  been  has  3 of  this  that  has  in  risen,  0.00  is  =  section  not  of  is  annum, Even  the  change  the  1.70%  per  of  return to is  no  Similarly, is  per  level.  rate  there  risen,  capital  did  rate  accepted.  declined,  change -  real  0.49% 15%  statistically  hypothesis  -1.70  the  analysis  productivity  of  at  by  regression  7,  productivity  the  capital  see  at  the  that  to  the  Hypothesis  between  return  in  capital  significant  of  return  that  durable  declined  part  of  to  statistically  productivity  Hypothesis,  of  in  the  Hypothesis  has  difference  is not  (ii) the  return  dummy  difference  rate  relative  11  (-0.67)  the  only  relative  to  rejected  real  for  significant is  -  explain  capital  in  of  hypothesis  The real  the  the  is  this  alternative  6  of  Capital  risen,  fully  the  productivity  competitiveness  durable  II; and  found  Hence,  in  accepted  rate  not  introduction  their  Hence,  15% level.  real  was  2.64  not  result  reported  that  at the  of  this  been  (i.e.  Hypothesis  share  (i)  timber  explanations  statistically  capital,  Hypothesis  the  does  change  Appendix  result  which  is  that:  Table  part  of  gain  significant.  but  maintained  possible  rate  which  facts  this  have  5.1.1. Therefore,  annum,  statistically  has decreased,  difference  Some  The  are  productivity  theoretical  the  results  industries  But  section  has  rate  net  stumpage. the  these  capital  significant the  rejected  second and  the  accepted.  productivity  -1.70)  is  negative  and  that  in  suggesting  cost  pressure  factor  input  Hypothesis  to  declined  by  has  pressure share  annum.  Hence,  The statistically  of  of  rate  the of  Therefore, 0.53%  is  is  0.53%,  in  a  of  spite  by  Hypothesis  9,  the  explanation,  use by  3.10% real see  per  share  of  annum.  second  per  share and  annum, of  its  this  Hence,  8,  which  materials  productivity  Both  Hypothesis  -  these  is has  have  results  are  that  the  real  materials  hypothesis,  that  real  materials  part  (-0.67)=  of  the  the  for this  share  of  Hypothesis,  real  price  of  not  statistically view  became  factor  of  in  that  low  level  per  annum,  energy  price  footnote  3 of  of  this  by  share  introduced and  it  price  significance. is  section.  the  0.22%  per  per of  has  annum  energy  has  the  at  15% level.  reported into  is  decreased  at the  was  in  Table  regression  observed  that  at the  5% l e v e l .  at  annual  the  7  an  Energy  statistically  energy  caused  is,  2.68%  expectations  significant  which and  (SF)  even  energy  indicating  input.  significant  was  has  that  input  equation  real  rate,  factor  the  statistically  negative  This  relative  this  variable  trend  same  the  is  input.  energy  that  in  -0.23)  materials  almost  dummy  its  the  materials  5,  change of  that  0.22%  respectively.  of  accepted  is  1.67%  by  alternative  -0.90  in  exponential  rate  declined that  (i.e.  particularly  time variable  accepted,  For further  which  relative  accepted.  Hypothesis  II. Therefore,  the  the  The  4,  of  But  relative  accepted.  appreciably  7  in  Hence,  relevant  the  is  part the  rise  11  anomalous,  for  to  is,  risen  of  and  is  industries  increase  of  Appendix  coefficient  declined,  materials  risen,  seemed  analysis  has  significant.  annual  of  accepted.  Hypothesis  rate  consistently  II.8  is  the  has  annum  first  rejected  that  the  input.  price  per  caused  rate,  (SM)  Real  gain  has  Hypothesis  the  productivity on  factor  0.90%  is  This  same  materials  Hence,  productivity  relative  This  and  changed,  net  of  this  accepted.  declined,  The  an  is  0.67%  not  for  the  Therefore,  significant.  has  industries.  almost  share  risen,  statistically  cost  by  significant.  consistently  materials  wood  is accepted  relative  statistically  price  the  rise  11  The  price  on  rate  productivity  significant.  productivity  of  have  -  has  Hence, risen,  is  rejected have  and  the  declined  The real  caused  2.45%  share  this  Hypothesis  11  change  change  in  consistent  that  in  tax  these  rise  Both  price  and  relative  the  difference  a  tax  for  real  energy  productivity  is  rate  and  structure  in  tax  of  the  the  this  rate  is  statistically  almost  fully  the  rate  of  the  definition  which,  change  relative  in  has  2.68%  per  is,  by  and  Hence, by  relative  share  in  real  of  share  was  2.50%  accounted  c h a n g e ' in  tax  effect,  This  significant.  between  the  energy.  declined  of  in  the  input.  rate  under  in  that  that  the  zero  and that  implies  of  rate,  have  are  This  use  same  factor  tax  productivity  negative.  results  is,  which  is  almost  share  with  tax  by  That  in energy  pressure  these  rate.  real  -2.63)  and  tax  in  change  accepted  taxes  the  of  cost  real  provided  relative  per  profitability of  energy  of  tax  rate  rate.  The  suggest  that  tax  also  the  progressively  favourable  industries.  The 7.62%  of  productivity,  decline  governments  in  rate  to is  respectively.  is  real  (-0.53)=  input  annum,  of  that  increasing  per  consistent  per  of  -  share  of  share  -3.10  relative  rate  to  (i.e.  the  The  rate  and  between  experienced  Hence,  the  taxes  have  hypothesis,  accepted.  price  the  annum.  is  difference  energy  industries  alternative  share  annum, in the  money  of  profit  which  wood  capital  is  (SP)  or  statistically  industries (SK1) has  has also  profitablity  has  significant.  consistently risen  consistently  Hence,  declined,  declined  Hypothesis  is accepted.  at a statistically significant  12,  The  rate  by that  relative  of  4.90%  annum.  The technical  results  change  relative  factor  labour  and  energy. capital  susbstitutable.  possible  the  industries  shares  pairs:  materials;  wood  suggest  materials;  Factor and  in  regarding  and  Elasticities  of  are  possibilities  labour labour  inter-factor  and and  capital  for  energy; timber; and  substitution,  substitution  reported  in Table  substitution materials  materials  timber  have  deduced  in  4.7.  between  and  and  and  been  found  accordance  The  labour  energy;  timber;  the  and  energy to with  be  bias  changes and  not  in  capital-  timber and  of  and  timber; easily  proposition  II,  are  in  accordance  change  in  industries  relative is  &  is  Nautiyal  capital,  is  materials  studies) Rao  5.1.4  PAPER  The has  &  rameters  for  significant  at  the  relative share  Hence,  not  materials  and  Martinello  (ii)  has  in  materials  have  that  study,  that  in  these  energy  using.  the  (1985)  and  technical  in  the  however,  technical and  Singh  productivities  decreased.  the  (wood  change  in  increased  case)  inter-temporal  fuel &  using;  (1985)  this  technical  (1985)  this  6  an  share,  is  suggest annual  the  Hence,  and that  4.5,  at  at  labour  15%  2.26%  level.  The  case  of  of  results,  change  substantially  and  per  the  of  The  1,  the  that  relative  0.07%,  in  the  Martinello differ  from  Real  labour  annum,  both  real  labour  price  and  real  labour  price  at  signifi-  also  not  statistically  relative  share  hypothesis and  being  not  trend  the  price  labour  the  are  labour  is  of  for  4.3,  alternative  share  which  estimates  in Table  Hypothesis  is accepted.  that  rate  reported  rejected  changed  2.19%  Hypothesis  Table  even  decreased,  by  in  15% level.  has  risen  of  increased  zero  relative  consistently  results  the  The  INDUSTRIES  reported  from  the  not  (1983).  that  productivity in  substitution.  Martinello  energy  using,  Preston  marginally  different  (i)  Martinello  The  results,  only  of  of  capital,  of:  (materials  saving.  & ALLIED  and  &  labour  those  indicates  results  capital  that  from  of  have  in  differ  industries  cantly  and  wood  those  has  saving  elasticities  also  saving  the  and  (T985)'s  (SL)  timber  supports  (1986)  calculated  shares  energy  however, wood  and  study labour  the  factor  labour  This change  with  of  that  labour  labour labour's  productivity  statistically  productivity  pa-  significant.  have  risen  is  accepted.  The fully The  offset  by  difference  labour relative the  increase  price share  relative  an  in  increase  between  (i.e. of  the  2.26  labour  the  rate  - 2.19  =  this factor  labour  in  share  input. is  of 0.07  an  productivity change ) is  Hence,  consistent  in not  annual at  labour  rate  the  of  of  This  and  explains  11, that the difference  2.19%  2.26%  productivity  significant.  Hypothesis with  a  rate  rate  between  is  almost  per  annum.  that  in  the of  constant  change  the  real  rate  in of  change  in  real  labour  Profit-maximizing  firms  factor  have  input  and  The year, (i)  relative  which  this  trend  is  result  is  sult  is accepted  the  relative  only  to at  hand, first is  in  has  only  of  of  But  in  by  and  7,  level  that  the  of  of  has  of  the  However,  is  accepted.  optimally  of  4.3, 8  which rate  this  risen,  used  this  of  of  1.33%  per  (ii)  the facts  the  significant;  this  Hence,  Hypothesis  3,  is  accepted.  which  above,  is  this  is statistically return  to  Hypothesis, that  that:  estimates  Real  also  durable  that  capital  on  significant.  rethat  rate  of  has  been  the  other  Hence,  capital  capital  of  significant  result  Capital _productivity,  of  hypothesis,  rate  are  annum,  stated  significance.  a  II, and  significance .  per  at  in view  in Table  reasons  real  alternative  have  risen  Appendix  1.00%  annum,  part  has  consistently  for  per  (SK)  reported  by  level  second  II.8  input,  risen  0.34%  the  table  capital  productivity,  industries  15% level.  its low  low  labour  allied  capital  However,  its  in  competitiveness.  at the  has  level.  &  their  factor  capital  that  durable  durable  Hypothesis  is rejected  has  the  risen,  productivity  productivity  has  negative,  which  has  declined,  accepted.  The cost  net  pressure  share  of  on  has  of  materials  an  annual  Materials  of  at  the  rate  not of  productivity  For further  is  15%  0.53%,  explanation,  is  which  risen  see  and  at  use  almost for  materials  changed,  -0.34-1.00=  in the  rise by  rejected  has  (i.e.  is accepted  share  risen, has  to  11  even  gain  industries  capital  relative  significant  materials  these  Hypothesis  The not  productivity  durable  Therefore,  8  of  this  of  spite  of  maintained  in spite  declined  part  risen,  for  and paper  expected  15%  accepted.  is  as  durable  accepted  the  share  share  the  in  significant  parameters  return  price  the this  (SM)  level. the  same  has  risen  has  caused  the  relative  is,  1.33%  per  annum.  rate,  that  by  0.02%  Hypothesis  alternative Real  significant  3 of  implies  factor.  a significant  footnote  is  capital. This  Therefore,  accepted. is  of  -1.34)  this  hypothesis, price at  rate  of  the of  section.  per 4,  annum,  that  that  the  materials 10%  0.49%  has  level per  the  which  is  share  of  relative  share  increased  of  annum.  at  significance. Therefore,  the  first  part  rejected  and the  declined,  is  The  explains  the  for  factor  have  marginal  in  this  of  Appendix  in  Table  dummy was  its  level  has at  that  at  the  on  is  at  into  of  the  5% be  Hence,  and  between  energy  the  rate  industries  and  explains  the  rise  1.73%  per  annum.  this  factor  is,  change  -1.81) in  is  the  is  industries,  where  their  annum,  facts  that:  factor  in  the  Table  11.8  reported  of  the  5% level, when is  a  accepted  relative  share  which (i)  input,  coefficients  the  dummy despites  of  energy  price  and  energy  productuctivity  annum. risen,  in energy  negative. relative  Hence, is  also 9,  accepted.  suggests of  increased  hypothesis  productivity  This  share  has  time  energy  have  This  accepted  Real  per  Therefore,  risen,  this  Hypothesis  11  and cost  input is  that  in  pressure  by  almost  accepted  for  input.  Both, statistically  that  =  of  0.66  rate,  0.66%  11  reported  result  that  has  has  negligible.  per  the  this  the  this  year  productivity  (i.e.  same  per  of  at the  5,  is  level  1.73%  for  (iii)  analysis;  of  price  the  - 2.47  and  productivity  product.  expectations  15% level.  2.47% rate  view  significant  at the  of  in  is  accepted.  in these  the  by  parameters  Hypothesis  input  physical  is  productivity 0.04)  at  changed,  price  Hypothesis  firms  the  level,  =  factor  increased  with  regression  significant  price  0.49  Hence,  However,  trend  to  is accepted  energy  -  not  materials  materials  average  has  has  materials  that  a dominant  (SF)  the  rate  0.53  price  real  that  materials.  are  level.  found  significant  (i.e.  accordance  significance. risen,  8,  with their  estimates  were  Hypothesis  profit-maximizing  15%  in  the  of  energy  significant  difference  energy the  the  a statistically  real  The real  of  statistically  increased  at  of  rise  materials  hypothesis,  which by  real in  gain  matches  share  introduced  consistently a  used  share  are  the  share  Materials  variables  variable low  relative  II, (ii) the  4.3,  of  the  about  alternative  product  only  that  productivity  share.  relative  siginficant  and  net  physical  change  and  optimally  The is  part  constant  been  8,  hypothesis  second rejected  accepted.  this  Hypothesis  alternative  Similarly,  is  of  the  relative  significant  rate  share of  of  5.36%  taxes per  and  year.  real  The  tax  decline  rate, in  have the  real  declined tax  rate  at  a  fully  accounts in  for  the  relative  change tion  decline tax  tax  productivity positive.  This  input  suggests  is  these capital  technical suggest  and  capital  and  agreement of  the  of  substituttion  This the  factor  anomaly  the  is  but  has  deliberate energy prices caused  and  energy the  level.  Hence,  in  have  problems  pairs:  and that  due  industry  to  for  own  account  for  the  growth  rates  ratios  varied  over  simultaneosly  in the  5.36)  to  the  with  method  available  analysis  Elasticities are the  elasticity  generated  by  production,  analysis.  prices;  This  share, and  This  real  (2)  the  variation  has  autocorrelation deal  undertaken  case  II.  energy  to  in  proposition  to  this  energy; materials;  calculated  analysis. of  of  and  of  shares  and  in  contributed  of  money  factor  energy  factor  in  bias  except  relative  of  the  ES),  of  annum,  of  (i.e.  the  the  purpose  in  II  problems  type  is  susbstitutable.  case  (1)  period  satisfactory  =  annum.  labour  (CALES)  has  ratios  the  in  share  capital  accordance  use  the  and  econometric no  in  reasons:  into  factor  easily  this  deduced  their  change  profitability  and  capital;  substitution  two  defini-  per  relative  materials;  be  ln  per  in  proposition  energy,  of  beneficial  that  4.64%  and  and  with of  of  6.10%  relative  changes  to  by 12,  The of  labour  not  rate  the  (-5.36)  substitution  The  labour  found  than  is  rate  4.7.  between  change  the  progressively  declined  accepted.  in  Table  -  of  under  rate  0.00  Hypothesis  inter-factor  elasticities  greatly  there  (SP),  significant  accordance  less  relevant  is  between  is zero  been  rate  decline.  possible  materials  distorts  As  declined  been  simultaneous  heteroscedasticity. econometric  10%  the  the  (i.e.  have  share  taken  omission  prices, of  been  of  Factor  this  rate  input to  probably  in  tax  this  have  pair:  appears  not  real  share  substitution  much  establishments  in  which  between  rates  calculated  input  difference  Hence,  difference  productivity,  profit  deduced  with  the  relative  energy.  taxes.  tax  reported for  of  effective  the  energy  substitution,  tax  at a statistically  are  and  in  that  regarding  possibilities  materials  with  consistently  results  and  the  risen  change  consistent  the  and  the  at  has  (SK1) has  The  of  or  significant  industries  share  that  that  causing  Profitability, which  is  relative  Moreover,  this  industries  the  rate and  rate.  of  in  share  in real tax  of  these  the  in  and  with  these  this  thesis,  the  empirical  results  have  The  empirical  results  reported  change  in  these  been  industries  corrected  in  is  Table  labour  only  4.7  for  also  and  the  problem  indicate  materials  that  saving;  of  the  and  autocorrelation.  bias  of  capital  technical  and  energy  &  Preston  using.  The (1983) in  that  in  results that  agreement  (in  reported:  this  and  change,  complements  and  is  Nautiyal labour  &  other  estimated Singh  to  pairs be  (1986)  productivity,  change  to  labour  reported  while  is  this  be  in  be  that  and  materials  and  labour  and  Martinello and  capital  both  (1985) pairs  energy  and  degrees.  in  other  and  productivity  increase  in  using  capital  and  are  are  materials  saving  results  differ  energy  complements  only  (ii)  and  saving.  in varying  estimates  Rao  capital  energy  capital,  material in  of  energy-using,  in  and  considers  decline  study  to  and  those  materials)  substitutes  and  and  (1983)  included  study  with  materials-saving. These  capital  wood-capital  this  agree  and  Sherif  labour-saving,  while  partly  labour-saving  of  is  and  (ii)  is  results  wood  wood-energy  only  capital-using  technological  technological  change  is  the  study,  substitutes,  (i)  change  change  with  and  (i)  study:  technological  complements;  be  this  technological  general  wood  of  energy  The and  and  using to  be  technological energy  an  labour  to  using.  increase  and  in  materials  productivities.  The  question  the  Canadian  the  Canadian  forest  income  undertaken  in the  made  is  industries  next  sub-section  OF  section clarified. and  with  do  these with  changes  those  the  results  of  in the  Finnish  forest  in  in  relative  the  factor  manufacturing  Ovaskainen  (1986),  industries?  who  These  shares  in  sector  of  has  studied  comparisons  are  section.  THE  is  EMPIRICAL  organised  Second,  that  5.2.1.  and  how  compare  distribution'  COMPARISON  This  arises:  industries  economy  'functional  5.2  now  as  RESULTS  follows.  functional  in  the  Canadian  Finally,  the  comparison  WITH  First,  income  OTHER  the  of  the  scope  distribution  manufacturing  STUDIES  in  of the  industries  functional  the  income  comparisons  Canadian  are  forest  compared  distribution  in  in the  Canadian  forest  sub-section  industries  of  the put,  approach forest  the  when  tax,  the  forest  Table  5.1  : Average  FACTOR  used  the  to  differences,  analyzing  income  functional  Finnish  income same  manufacturing  is an input  of  forest  industries  period  industries  however, to  differ  of  follows  in  somewhat  Second, from  the  the not  taxes  in  factor intaken  include  entering  into  into only the  industries.  relative factor  shares  manufacturing industries, CANFORESTIND  4  (SL) (SK)  and the  Canadian  forest  Finnish forest  CANMANUFIND  1  VAR.  13  in the  b  FINFORESTIND  VAR.  MEAN 24.00 16.70 -  22.83 5.07  2.14 2.77  Interest (SK1) Tax (Taxpart)  3.56 3.34  2.25 1.89  2.13 0.27  Profit (SP) Material (SM) Energy (SF)  6.30 39.95 5.12 1.65  39.58 29.56  3.59 2.50 9.58 54.24  (ST)  industries  MEAN  12.87 10.44  1.06 0.35  industries,  2  30.75 9.35  Stumpage  been  distribution  is  taxes  yet  employing  First,  industries  sector.  has  income  mention.  forest  manufacturing  analyzed  functional  the  in the  analysis,  are  deserve  manufacturing  thus  distributioin  determine  particular  the  and  MEAN Labour Capital  in  covering  been  Two  which  Canadian  of  Canadian has  industries.  corporate  study  economy,  that  stumpage,  analysis  no  Therefore,  consideration the  that  Canadian  undertaken. same  that  5.2.2.  It seems sector  with  2.19  17.99 5.55 0.18  -  -  3  VAR.  44.80 14.4  ' C A N F O R E S T I N D refers to the Canadian forest industries; C A N M A N U F I N D refers to the Canadian manufacturing sector; ^FINFORESTIND refers to the Finnish forest industries; F A C T O R refers to relative factor shares; ->MEAN is expressed as percentage; and V a r . refers to variance.  2  4  6  In  his  study  Ovaskainen  (1986)  stumpage,  while  durable  capital,  of  functional  considered the  money  only  income four  present  study  capital,  material,  distribution factor  has  inputs:  considered  energy,  in  the  Finnish  labour, eight  stumpage,  taxes  forest  capital, factor and  industries,  materials, inputs:  and  labour,  entrepreneurship.  Capital  share  factors:  durable  materials and  in  two  ered  the  Ovaskainen's capital,  the  energy  only  in  in  money  Finnish this  logging  is  the  industry  equivalent  to  the  total  of  the  entrepreneurship  and  taxes  in  this  comparable  Also,  (i)  is  capital,  study  study.  sub-groups:  study  to  Ovaskainen  wood  only  the  divided  industries,  for  the  sum  the  study;  shares  forest  of  of  and  materials  the  Finnish  (ii)  paper  industries.  He  consid-  of  labour  employed  in  logging  and  purpose  of  shares  industries  into  operations.  5.2.1  COMPARISON  Average manufacturing share  of  the  WITH  relative sector  labour  CANADIAN  factor  are  in  "manufacturing  industries  (22.83%)  labour  in  substantially forest those  (54.24%)  is  taxes  are  of  percentages factor  higher  that the per  the  manufacturing  for  ease  prices  in  and  the  in  the  share  the  forest  same annum)  order in  (GRP)  in  of  industries, The  be is  are  2.50%  industries  of  profit  in  been  of  exponential  DIFF  =  in  trends  the  industries  & energy  in  higher  including  shares  and  of  are  is the  than  are  rates also  of  (9.58%)  is  capital  prices  reported  sector  share  growth  forest  growth  GRP)  money  factor the  the  sector  Annual  real  both,  annual -  that  in  manufacturing  manufacturing  for  GPR  are  here as  logging  the  (41.60%  (GRS),  between  order  substantially  industries.  shares  in  respectively).  factor  estimated  differences (i.e.  The  groups  factor  the  same  fuel  that  industries  mention  and  the  relative  than  to  the  also  material  forest  both  and  in  The  higher  forest  the  capital  the  industries.  the  of  those  comparison.  relevant  durable  of  of  and  substantially  industries  (5.07% and  using  productivities  ease  that  respectively)  share  SECTOR  industries  is  may  shares  relative have  it  wood  the  for  implying  the  sector  that  5.1  industries  5.12%  hand,  comparison. factor  in  and  than  productivities  of  that  (9.35%  other  allied  forest  (30.75%)  However, &  Similarly,  Similarly,  than  but  manufacturing  the  stumpage). higher  higher.  in the  paper  sector,  industries  On  the  the  in Table  industries  labour-intensive.  manufacturing  in  forest  comparatively share  shares  reported  the  MANUFACTURING  and  rates  (as  (GPR)  and  industries  and  in Table of  real  reported  5.2  factor in  the  same  table.  Table  5.2  : Annual  growth  rates  variables  in the  forest  relevant FACTOR  (%/a) of and  CANFORESTIND  1  GRS  GPR  4  (SL)  -0.82  2.29  Capital  (SK)  1.09**  1.00**  manufacturing  shares  and  industries,  other  1957-84  CANMANFIND  2  3  DIFF'  GRS  GPR  GRP  DIFF  -0.86  -0.34  2.76  3.23  -0.47  -0.13** 1.13**  1.13**  1.00**  -0.09**  1.09**  -  -  GRP  3  Labour  relative factor  b  3.15  Interest  (SK1)  5.10  -  -  -  5.09  Material  (SM)  1.51  0.07**  -1.38  1.38  0.48  0.60  0.35  0.25  -3.98  -0.88  2.59  -3.47  -  -  -  -  1.37  0.89*  -0.45*  1.34  1.34  2.91  1.53  1.38  -4.89  -4.89  0.00  -4.89  -2.50  -  -  -  -7.74  -  -  -  -6.56  -  -  -  Stumpage Energy Tax  (ST)  (SF)  (Taxpart)  Profit  •-  F A C T O R refers to relative factor shares; C A N F O R E S T I N D refers to the Canadian forest industries; C A N M A N U F I N D refers to the Canadian manufacturing industries; C R S refers to annual growth rates (%/a) in relative factor shares; ^GPR refers to annual growth rates (%/a) in real factor prices; annual growth rates (%/a) in factor productivities; D I F F = GPR - GRP. 1  2  3  4  b  GRP  refers  to  7  Table  5.2  manufacturing degrees. rate  of  forest  the  0.82%,  than  share  that  this  factor in  relative  have by  the  factor  changed in  in the  which  pronounced  The  that  have  relative  industries,  forest  forest  industries  Labour's  substituting more  suggests  the  in  the  forest  other logging  same  sector  traditionally  factor  inputs,  industries  in  industries  manufacturing been  shares  than  the  forest  direction, declined  albeit more,  (0.34%). This  that  in  capital.  the  to at  other  and  varying  an  suggests  labour-intensive, particularly  industries  annual  that  the  are  increasingly  This  change  is  constituents  of  industries.  rate  industries  of  increase (3.15%  in per  labour annum)  productivity and  the  is  of  the  same  manufacturing  order  in  industries  both  the  (3.23%).  However,  the  manufacturing per  These  industry  manufacturing  The energy, both  than  in  declined  rise  in  the  been  energy  input  has  total  (1.51%  has  increased  the  use  the  manufacturing  (0.35%  risen  price slightly  material  industries per  that  support  wages  this  is  in  slightly  the  the  to  higher  forest  general  rise  annum).  durable  same  more  capital,  direction  manufacturing.  in  the  in  industries  impression than  the  (2.29% that  the  in  the  those  (0.89%).  The  causing in  the  decline  by  0.45%  of  However,  use  its  money  and  manufacturing  input  are  to  with  used  increasingly  than  capital,  be  sector  of  forest per  the  same  the  real  input  to  industries  capital,  (2.91%  this  productivity  &  order  in  price  of  annum)  has  rise  An  fuel  per  by  probably  annum.  the  of "but  rise  the  the  of  rate  probably  1.53%  per  continues  explanation  the  significantly  in  the  manufacturing  probably  -1.38%  This per  changed  increased has  in its  is  annum)  in  in  for  in  forest  and  material to  real  to this  in  the  and  use  energy  of has  forest  industries  the  forest  industries  (0.48%  per  annum).  industries,  annum).  industries  in the  capital  the  forest per  labour  price.  productivity  increase  of  Therefore,  industries the  costly  Also,  use  both  more  (0.60%  caused  the  rise  sector the  energy.  capital.  manufacturing  not  is,  comparatively  of  risen  increase  has  has  use  also  and  That  an appreciable  has  in  materials,  in  materials  that  substituting  complements.  despite  industries.  (i.e.  of  the  sector  particularly  share  annum)  materials  forest  not  total  higher  to  found  relative  in  and  industries  increasingly  Real  of  than  price  follows.  manufacturing,  per  do  shares  also  of  inputs,  have  and  labour  annum)  industries  use  is as  other  The  are  productivity  forest  been  relative  forest  energy  also  real  caused  manufacturing  anomaly  by  in  profit  the  its  The  per  have  significantly  whereas  apparent  in  results  industries  the  causing  input  and  risen  that  annum,  unions  forest  has  (2.76%  empirical  changes  the  increase  sector.  taxes  energy  of  industries  annum).  forest  rate  and to  As  while a  result,  decreased  decline  manufacturing  it  in  in the  sector  5.2.2  COMPARISON  Average  relative  forest  industries  Finnish factor  WITH  shares,  industries  real  are  Table  Labour Profit  are  the  prices  in table  : Annual  SHARE  in  FOREST  reported  factor  relevant  FACTOR  shares  reported  5.3  FINNISH  Canadian in  and  table  5.1.  factor  rates  industries  Annual  and  growth  productivities  in  the  (%/a) of Finnish  relative  forest  in  those  rates  the  factor shares  industries,  GRS  1  (SL)  in  in  the  relative  Finnish  forest  other  1955-83  GPR  4  and  GRP  5  DIFF  6  7  3.7  4.0  trend  -1.3  -ve  -  -  -  (ST)  decreasing  0.6  0.0  0.6  (logging)  decreasing  6.5  7.2  -0.7  slight  (SK + SK1+Tax + SP)  Raw material Stumpage Labour  forest  5.3.  growth  variables  INDUSTRIES  increase no  (SM + SF)  FACTOR SHARES refers to relative factor shares; ^CANFORESTIND refers to the Canadian forest industries; ^ C A N M A N U F I N D refers to the Canadian manufacturing industries; G R S refers to annual growth rates (%/a) in relative factor shares; ^GPR refers to annual growth rates (%/a) in real factor prices; annual growth rates (%/a) in factor productivities; DIFF =GPR - GRP.  -0.3  1  4  °GRP  refers  to  relative  share  of  7  labour than  It  may  in  the  that  Canadian Finland. to  in  The in has  observed  Canadian the  forest  2.29%  industries  be  forest  Finnish  industries  real  labour  the  Canadian  risen  by  from  Tables  industries  forest are  price  in  industries  Finland  has  industries.  4%  per  and  (30.75%  comparatively  forest  about  5.1  5.3  per  (24.00% more risen Labour  annum,  that  annum) per  labour by  the  3.7%  that  significantly  annum) .  That  9  intensive per  productivity  while  is  in  than  annum in  the  the  as  higher is,  the  those  opposed  Finnish  forest  Canadian  forest  The shares of labour in the Finnish w o o d and paper industries are respectively 22.1% and 17.4% as against 28.31% and 23.79% respectively in the corresponding Canadian industries. 9  in  industries  has  increase forest  in  the  by  share  3.15% of  Canada  share  (1.65%).  this  higher  share  in  of  stumpage  The  changes  is  Canada  declining (3.98%  whereas  reported  to  capital,  money  durable  relative taxes  shares  and  profit  The order this  of  Ovaskainen this  have  average  in  both  no  decreased  of  (1986)  change  share  is  not  available  of  the  not  industries  comparison  in  in  is  has  reported  negative  in  a  the  slight  Canadian  for  that  in  change  and  Finland  however,  in  However, Finland in  (14.4%) the  capital  rate  (about  profit,  have  than  same  the  On  that  in  direction  in  decline  is  of  0.6%  which  entrepreneurship.  (including the  the  Finnish  and  limited.  fuel  &  countries.  compared.  Canada  is rather  in  per  annum).  includes the  increased  returns  other  and  hand,  those  of  Canada.  both  be  are,  money  material  annum  structures  than  and  higher  countries.  taxes  in  per  can  the  perceptible  45%  change  share  annum)  of  this  this  capital,  shares  of  of  significantly  durable . capital  directions  scope  is in  per  (1986)  in  annum.  labour,  Ovaskainen  the  per  industries.  The  that  risen  energy  However,  forest  While Finland  it  in  Canada)  the  industries. may  are  be  rate  of  change  Therefore,  observed  significantly  of  are  the  that  the  different,  the  6.  6.1  THE  PROBLEM  This order  for  describe  Canadian  forest  addressed  the  RESULTS  IN  PERSPECTIVE  ADDRESSED  study,  to  EMPIRICAL  the  the  first  existing  industries  following  and  has  its  factor  shares  have  relative  2.  How  have  real factor  3.  How  have  factor  4.  What  prices  the  trends  in  distribution  over  over  changed  investigated  sectors.  changed  changed  productivities  been  income  constituent  questions:  How  empirically  functional  major  1.  have  time,  In  time-series and  data  trends  particular,  the  in  in  the  study  has  time?  time?  over  time?  inter-factor  substitution  factor  paid  and  technological  change? ln  this  study,  product. cost.  This  industries  factor  The 1.  results  of  changed  the  by the  of  Crown  this  methodology  equal  is  rate the  has  paid  dealt  thesis  between  was  been  and that the  difference A  has  superficially  OF  RESULTS  this  study  can  be  support  the  principal  results  observed  2.  factor  only  charged  each  that  value  much the  its  of  marginal  opportunity  economic  factor  in  real  based  issue  on  of  rent?  shares  a relative  change  followed  its  its  controversial  relative in  of  as  'true'  change  rate  been  as  with to  of  the  in  the  factor  share  factor  price  an  incoming  approach.  SUMMARY  The  each  hypothesis  have  with  that  however,  productivity.  accounting  6.2  that  has,  principal  consistent  and  assumed  is stumpage  The forest  was  implies  The . study  stumpage:  is  it  change  in  hypothesized  change  The  share  forest  relative  industries.  the  summarized  relative  in this  as  follows:  hypothesis. share  of  There  is  stumpage  only  is  one  not  exception.  The  consistent  with  the  industry  and  the  share.  of  labour  has  Real  labour  price  declined and  in  labour  the  logging  productivity  have  significantly  increased  in  than  increase  the  labour's The  relative  relative  industries labour  has  real  share  that  The  relative  almost  share  capital  has  share  industries  and  Materials'  relative  of  change  increase  in the  in  productivity.  However,  each  of  constituent  a.  the  relative  increased.  b.  materials' The  real  decline c.  cantly  The  relative  cept  the  share, and  price  that  in  a decline  in  the  rise  the  paper  &  industries,  the  in  productivity.  labour  rise  allied  in  real This  in  has  the  forest  declined  in these  has  industries  and  its  in all industries. This  im-  industries.  significantly  increased  in  the  forest  in  the  share of  is  but  industries. its  mainly  change  materials  real  forest  productivity  due  in  There  to  the  materials'  is  has  no  sig-  declined.  decline  relative  in  its  share  in  vary.  price  in  slightly  is the  of  &  The  the  logging  decreased,  but  industry  significantly  materials  productivity  in  wood  and  its  more the  decline  productivity than  paper in  industries  that &  slightly  increased.  both  slightly  declined;  real  materials  price.  in  allied  materials'  only  industries  productivity  has  is  not  offset  the  signifiby  the  industries,  ex-  price.  stumpage  allied  substantially  industries.  difference  timber  the  being  share  its real  share  in  materials  relative  paper  that  of  in productivity  in  these  materials,  sources  share  of  changed.  decline  and  to  more  declined.  relative  materials'  of  industries  Materials'  led  is  industries.  relative  the  share  substantially  income  price  materials'  industries  In  used  increased  real  has  increased  intensively  has  productivity  labour.  productivity  its constitutent share  by of  has  interest  labour  difference  wood  changed.  capital  been  the  share  Capital  This  in  industries.  offset  relative  increase  price.  in  fully  of  the  the  significantly  constant  the  labour  labour  industries.  plies  but  in both  of  not  relative  constituent  The  in  is  the  nificant  industries,  share  price  explains The  these  between  productivity  only  The the  declined  hypothesized rate  partially  of  in  rate  change  explains  all  the  in  the of real  change  in  this  stumpage  rate  observed  decline  in  this  share. The  economic 8.  The  this to  share  increased, share.  energy  energy  sources  energy's  stumpage  increased  productivity  of  relative  increased  increase b.  the  change  c.  is  likely  to  be  less  than  the  'true'  in  the  forest  decreased,  in  this  industries.  causing  share,  Real  a positive  however,  differ  energy  change  from  in  industry  share  increased.  wood  industries  in the  relative  probable more  11.  Profitability  12.  The  thus has  changes for  The  input  factor  materials  have,  for  pairs.  The  inter-temporal that  Capital  the  this  firms  pairs:  in  energy  an  enhanced  significantly  increased.  and  changes of  the  energy  in this  paper  substantially  least  factor  productivity  share.  &  allied  increased,  integrated  forest  between  been  industries  but  energy  have  relative  technological  all  of  industries,  decline  being  the  the most  industries.  the  logging  that  over  other  firms  industries.  time in  more  the  A and  corporate  tax.  the  factor  labour  more  been  is  forest  industries.  pairs  found  in  income  in  capital,  the  with  corporate  the  wood  anomaly  shares  &  in the  increased  apparent  to  in  industries,  however,  all the  in  in  declined  allied  became  energy  but  increase  energy price  and  labour  general,  bias  &  subject  substitution  put  cate  taxes,  relative  in  causing  industries  decreased,  substantially  industries  declined  possibilities  Real  increased.  paper  became  in  energy  taxes  of  explanation  and  industry.  decreased,  a substantial  purchased  slightly  allied  share  logging  wood  slightly  causing  the  unincorporated  sector  in the  of  of  and  paper &  energy  Real  only  share  the  productivity  only  the  relative  in  energy  price declined  productivity  The  of  substantially relative  increased  share.  share  energy  also  The  share and  in this  relative  Real  13.  of  but  The  price  10.  of  industry.  a.  9.  share  rent.  relative  price  reported  change  inputs  and  to  be  shares  in  in  these  industries in  energy,  susbtitutable  found  factor  forest  varying and  than  other  suggest degrees.  labour factor  and in-  complements. the  forest  industries  industries is  labour  indiand  timber  saving;  technical a.  change  technological  The  in the  a.  of  the  of  the  saving; in  the  are  follows:  as  industries  timber  paper and  the  the  &  saving;  forest  allied  capital  relative  The  and  the  and  directions  wood  material,  Canadian  industries  is  and  energy  using.  factor  shares,  real  industries  manufacturing  industries  industries  relative  industries  POLICY  Some  and  using.  of  industries  energy,  and  are  in  estimated  factor  general  to  be  prices  and  agreement  with  industries. forest  industries  with  the  Finnish  forest  are of  have  substantially  more  labour  change  in  different  intensive  the  than  relative  structures. the  factor  The  Finnish  shares  Canadian  ones.  widely  differ  in  industries.  the  SOME  in  directions  both  6.3  in  change  Canadian  the  forest  c.  logging  capital  reveals:  that  b.  industries  the  labour  material  comparison  industries  be  change  productivities  those A  and  directions  factor  in  and  using.  labour  15.  to  energy,  constituent  changes  estimated  capital b.  material,  in the  technological are  14.  and  share  than  of  that  stumpage in the  IMPLICATIONS  policy  implications  Canadian  OF  of  is substantially  THE  the  higher  in the  Finnish  forest  ones.  FINDINGS  findings  of  this  study  are  suggested  as  fol-  lows: This  study  factor  inputs  relative  in  above For  described  employed  factor  substitution used  has  forest  shares,  real  factor  bias  technical  devising  example,  existing  in the  and  mentioned  the  of  policies  aimed  distribution  industries. prices,  change. at  The  bringing  of  income  It has factor  also  amongst  described  productivities,  findings desired  of  this  changes  trends  in  inter-factor  study in  various  any  may  be  of  the  the  real  variables.  real . labour  price  has  substantially  risen  compared  to  prices  of  other  technologies aimed  and  at  and  be  (i)  employment Any  of  attempt  effects The  on  firms  to  SOME  for  care,  base  further This  may  be  production  the  identified on  competitive  function  input  This  to  FURTHER  used  to  Thus,  policies  would  be  not  achieve  and  both  (ii)  their  increase  in  is  likely  very  that  the  bring  to  have  well  the  firms  desired  adverse  behaviour  respond  changes  to  in  the  these  those  the  in  change  could  study  study  was  a  the  heroic  product  and  constant  which  productivities, be  apparent  preliminary.  at  and  prices,  spite  several  of  have  investigation  However,  issues  ln  and an  between  factor  exhaustive,  attempt  complex  relationships  it  some  of  does  form  the  areas  of  follows:  some  and  are  first  most,  these  intricate  factor  this  as  imperfect  RESEARCH  unraveling  into  exhibits  timber,  through  may  explains  implies  FOR  at  enquiries  based  exception  factor  supplied  are  face  study  in  considered,  further  is  time.  subsidized.  stumpage  this  technological  text.  industries  strong  and  the  study  labour-saving  industries.  of  This  of  employment  members;  profit.  and  in  research  their  be  shares  short-comings  for  unions  may  upon  the  identified and  AREAS  factor  substitution  labour  and  in  over  otherwise  forest  use  firms.  which  in relative  labour  which  are  share  industries.  embarks  considerable  a good  forest  and  for  the  declined  labour  in the  used  study  changes  kind  model  these  that  wages  of  has  they  relative  ON  inter-factor  this  the  REFLECTIONS  No  been  real  policies  encouraged  wage  unless  above  shares  the  of  labour  members  raise  relative  in  behaviour  the  in  their  microeconomic  6.4  from  microeconomic  of  real  rise  has  employment  ineffective  inferred  objectives:  This  labour  increasing  incompatible It may  factors.  assumptions factor  returns  other  to  to  markets.  There  as:  the  and  scale.  Some  readers  is  particularly  these is,  This  industries  (ii)  (i)  markets;  assumptions.  is specific  such  and  therefore,  the  forest  underlying may  take  true  for  in  Canada  is  a  need  to  re-investigate  the  constraining This  has  as  improved  used:  reported  by  important  factor  inputs  and  the  shifts  study  are  viewed  with  (1973),  accept  researchers  there  a  variations This  study  may  be  tion to  in use  need  functions. thesis  costs?,  charged  which  with  under  less  (ii)  implicit  price  Canada.  It  could  cross-sectional  price  indexes  be  analysis.  for  various  only  fit  approach raised  are  by the  are  a  problem  very  extensive  operating  in  of  help  Therefore,  industries so  a  that  number  consider  over  cyclical  of  other  functional  and  address such  earning some  cases,  functional  possibility  is  underlying  some  the  questions  (i)  of  are  all  equivalent  'economic economic (in  One  distribu-  of  returns  aggregation  income  estimation  as  its true  different  in  approaches.  specification  to  and  closely.  alternative  equal  but  fluctuations  periods,  should  the  earning  Porter  empirical  fluctuations.  which,  more  superficially  factors  be  trends.  trends,  will  would  These  individual  shorter  studies  industries  Crown  for  this  industries,  cyclical  in  in  including  rule.  cyclical  data  involves  forest  used  Future  following  that  only  as  linear  the  to  distribution  secular  investigate  This  (ii)  the  on  form.  to  well  shifts  individual  the  shares such  these  in  than  factor  included  researchers  shares  rather  industries  yet  empirical  beneath  as  all the  cases,  factor  in  from  which  the  in  functional  period,  industries  opportunity  industries,  examine  a need  has  and  Statistics  reliable  in  Some  shifts  restrictive  in  study  data,  data  most  exceptions  separated  production  This  by  more  shares  some.  stability  macro-model,  this  cases  of  in  shifts  is  longer  individual  stumpage  distribution  time-series  time-series  factor  by  such  time-trends,  a  the  significant  be  to  be  also  the  construction  concentrated  production which  of  in relative  to  a very  is  income  outputs.  there  can  There  most  significant  considerably  for  in  the  attribute  that  forms  published  skepticism  maintain  a  is  them  is  only  statistically  consider  functional  (i)  supplementing  More  Though  of  assumptions.  study  indexes,  subject  rent'?,  to and  of their  (iii)  is  rent?  geographical  geographical  factors  zones  sense)  under  of  widely  varying  circumstances.  would  only  level.  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Statistics  Canada,  108  Statistics  Canada  (1983):  Historical  Statistics  Canada  (1983):  Fixed  13-568  (Occassional),  Statistics  Canada  Statistics  Canada:  (1976-84): Cat.No(s).  Capital  Statistics  Dan Press,  Varian,  H.  White,  K.J.  Woodland,  A.D.  Production.  Nancy V.5.1. (1975):  G.  and  Horsman  Canada,  Historical  Ottawa.  1936-83.  72-618.  Statistics  Canada,  Statistics  Canada,  Ottawa.  American  Capital. The  Norton  British  Columbia.  Review,  Economic  University  & Co.,  Shazam: The  Structures,  Economic  Stocks,  Bias.  of  (1986): of  Substitution  International  72-502.  Analysis.  Statistics  Catalogue  Ottawa. and  Measurement  University  Canada,  and  Technological  (1978): M i c r o e c o n o m i c and  Flows  Canada,  72-207  (ed.) (1980): The Chicago, pp.557.  Programme,  of  Cat.No(s).72-005  Stevenson, R. (1980): Measuring 70(1):162-173. Usher,  Statistics  New  York.  Econometric  Ottawa.  Review.  of  Chicago  284pp. Computer  291pp.  Equipment  and  Labour  in  Canadian  16:171-187  Wright, R.K. (1964): Towards a General Theory of Depreciation. Reprinted Journal of Accounting Research, ll (1964):80-90 in Readings in the C o n c e p t & Measurement of Income: R.H. Parker and G.C. Harcourt (1969). Cambridge University Press, Cambridge, pp.402.  from (ed.).  APPENDIX I  CAPITAL  The  measurement  problems  in  including  Coen  Three  applied  aspects  investment, second,  even  used  the  (iii) the  in  third,  this  type  of  if  all  Diewert  capital the  aggregation For  and  problem  analytical  problem.  aggregate  economics  (1976), of  of  MEASUREMENT  durable  has  items,  relevant  be  Hulten  were  are  of  diverse  these  still  attention  of  a number  Wykoff  any  (1)  etc.  available,  only  reasons,  is  &  prices  framework widely  stock  highlighted:  their  data  capital  attracted  (1976), can  METHOD  first,  are  all the  not  measure  adds  of  of  major  scholars (1964). data  on  available;  (ii)  are  the  the  durable  of  required  which  to  the  Wright  generally  representation  items  of  and  assumptions  a partial capital  (1976)  one  generally  reality;  and  complexities  capital  is  only  of an  approximation.  Statistics  Canada  time-series  data  method  elaborated  the steps  is  procedure involved Step  1:  on  of  the  capital Step  2:  3:  will be  by  Stat.  for  each  in  Cat.No.  Stat.  annual  good.  This  flows.  Canada as  into is  and  Cat.  in  theory salient  constructing  underlying  steps  No.13-211  this  involved  (1986).  in  Important  follows: series,  the a  methods  The  13-522  investment back  inventory  and  are outlined  industry,  capital  stocks  Canada  procedure data on  perpetual  broken  period  series  down  of  of  by  'average  current  the  type  economic  dollar  gross  of life'  fixed  formation. obtain capital  4:  the  or,  if  necessary,  construct  an  appropriate  price  index  of  the  goods.  estimate  concerned.  Step  this  relevant  relevant Step  in  capital  summarized  obtain  expenditure  revised  durable  are in  uses  'average  If average  discarded  (i.e.  the  current  given  price  economic  lives'  economic  life  withdrawn  from  dollar index  gross (cf.  of  fixed  step  a the  of  assets  machinery production)  capital  2) to  the  is  in  L years, in the  formation  derive  used  capital  series  the  this  (L + 1)th is  formation  then  industry machinery year. deflated  expressed  in  terms year  of  the  average  for  the  price  formation Step  constant  step  For  of  Canada  uses  estimates resultant  series capital  stock  may  following  of  Let  w.  be  the  new  which were  used  also  be  to  2.  Net  of  gross  the  be  capital  where  d.  If  and  K „ m  consecutive is given  is  gross  fixed  weights  of  (in  constant  dollars)  is over  entire  formation  a  the  base capital  by:  are  years  n  the and  gross ° n1,  be  the  =  end =  The  dollar  of  each  Let  added  to  is  (net)  L  year  some  Statistics study.  from  the  year.  The  also  called  mid-year  be  say,  period.  period  the  gross  in  by  constant  category,  is  As  This  as  good  in this  year  stock.  years  time,  substracted  formation  expenditure  end  is used  procedure.  during  over  depreciation.  expressed  particular  are  L  deducted.  worth  are  stock.  for  capital  year  are  same  as current  i,  dollar  gross gross  stock.  the  average  machinery  and  and  the  I.  be  Then:  L is:  Zw..l., i it  average  n  ago  capital  capital  capital  at the  factor  the  illustrates  n  the  of  each  its  capital  to  (net)  at the  L years  may  the  is depreciation  n  fixed  in  formation  in  depreciation  expressed  examples  additions  method,  goods  capital  summation  fixed  K  which  accumulated stock  annual  stock  gross  gross  ascertain  addition  The  a  are  in  annual  K1  3.  year dollar  declines  depreciation  K where  the  data  made  good  dollar  capital  expenditures fixed  years,  end-year  hypothetical  lives  period,  formation.  (net)  Cross  in  constant  capital  this  is  measures  and/or  investment  called  fixed  capital  line  constant  stock  equipment.  is  goods  of  estimates  (net)  economic  1.  straight  of  fixed  given  depreciation  the  7:  end  additions  a  method  net  capital  This  gross  subsequent  as  6:  Step  The  the  stock while  Step  index.  dollar  At  3).  derived. the  of  series.  5:  (cf.  prices  economic of  life,  period  that  is,  i=  1,  2,..., L.  L is:  yw..l d. I it i v  in the year i. (net)  fixed  capital  formation  at  the  end  of  two  1  then  mid-year  gross  (net)  fixed  capital  formation  K  Following fixed  capital  each  category  bined  the  data  series  are  time-series  same  added  on  procedure are  (K  for  each  obtained.  together  capital  =  stock  for and  +  n  K  J/2  category  For  a  the  period  given  depreciation  *****  nl  of is  of  capital  industry, empirical obtained.  the  goods,  gross  relevant  study.  Thus  (net)  data a  on  com-  APPENDIX II  TABLE 11.1: Output Values. Output Indexes. & Price Indexes for the Forest YEAR  FOREST INDUSTRIES VSHIP  1957  2  QIND  3  LOGGING PIND  INDUSTRY  Industries^ 1957-1984.  WOOD INDUSTRIES  PAPINDUSTRIES  1  VSHIP  QIND  PIND  VSHIP  QIND  PIND  VSHIP  QIND  PIND  646.2 510.7  85.0 77.8  77.9  61.2  89.8  58.9  1877.6 1909.4  51.3  73.2  51.6  90.9  582.6  89.0  67.1  995.5 1008.4 1071.9  69.5  67.2  76.1  60.2  2033.5  90.3  75.5  646.1  96.0  69.0  1012.1  72.4  59.8  2129.0  55.3 57.8  629.9  85.7  65.2  2225.1  59.5  91.8  87.3 79.8 85.8  1053.3 1242.5  69.9  653.4  75.3 76.7  77.2  68.8  62.4  92.7  79.6 82.9  1304.0 1443.2  79.6 85.0 88.9  70.0 72.6 72.9  2355.3 2465.9 2723.5 2908.5  65.7 71.8  93.1  90.9  75.6  3208.0  84.2  93.0 93.6  4  3108.3 3047.4  54.3 55.0  1960  3289.3 3382.7  59.3 60.7  1961  3446.0  58.8  1962  3704.6  61.7  79.3 81.2  1963 1964 1965  3756.3 4261.2  62.0 68.7  82.0 84.0  619.8 693.7  4469.0 4809.6  71.5 75.6  84.6 86.2  743.5 825.8  88.1  86.5  1966  96.1  88.0  1516.6 1607.6  1967  4777.7  73.6  87.8  842.8  94.9  91.0  1685.2  92.5  77.9  3281.7  85.5  94.2  1968  5022.7 5485.7  73.2 76.7  92.9  884.4  94.9  1979.2  3450.5  90.6  1019.2  2190.9  95.2  3877.0  99.3  93.6 95.9  92.8  967.5  102.7  100.0 996.5  93.9 98.4  90.1  96.8  95.5 104.5  1961.2  99.7  84.1  3983.7  100.3  97.5  100.0  975.7  100.0  100.0  2339.2  108.2 126.2  1 10.0 131.4  3088.0 4162.9  100.0 1 1 1.4  4429.7  100.0 108.8  100.0  1 16 1.4 1618.1  100.0 1 18.4 126.8  4070.7  105.0 125.8 155.1  140.3  5296.2  1778.6 1621.3  123.9 102.4  147.1  139.3  162.2  4021.1 3848.4  123.4  172.7  139.1 157.2  7827.6 7235.3 8454.3  105.3  197.2  175.5  8967.0  105.9  208.0  207.8 241.1  10145.2  1 17.6  212.0  12369.9  1 17.6  14641.0  1 17.6  258.3 305.8  15859.4  1 19.1  14368.5  105.5  1958 1959  1969 1970  5312.5  77.5  197 1  7385.6  1972  8679.0 1 1077.2  100.0 1 1 1.9  1973 1974  1 19.2  7 7.5 74.9 75.1  1975  13627.3 12705.1  1 19.0 99.6  1976  15435.3  1 15.0  181.7  1892.2  106.5  182.0  5088.8  1 18.3 138.4  1977  17064.0  195.8  2069.0  108.1  196.1  1978  20159.0 24592.4  1 18.0 128.2  2440.1 3 19 1.9  1 15.7  216.1 263.4  146.9 155.8  130.7  2 12.8 254.7  6028.0 7573.7 9030.6  160.1  26351.2  129.8  274.9  3249.1  127.8  27224.0 23945.8  129.0  285.8  2917.7  1 12.3  288.7  2498.4  1979 1980 1981 1982  124.2  8461.1  155.1  1 12.2  260.6 266.4  8446.9  155.9  233.1 231.7  90.1  284.3  7078.9  134.9  224.2  76.8  1 12.7 1 14.7 89.7  90.5  92.2  100.0 1 15.4 167.7 198.1  327.0 334.4  1983  27878.3  131.4  287.2  3271.2  112.2  298.8  9613.1  167.3  245.7  14993.9  118.1  311.8  1984  31186.0  137.7  306.6  3536.9  120.7  300.4  10059.4  175.6  244.9  17589.7  123.0  351.3  PAPINDUSTRIES refers VSHIP refers  to the Paper & Allied Industries;  to the value of output (in million dollars) of the given industry;  QIND refers  to output quantity index  PIND refers  to output price index  (1971 = 100);  (1971 = 100).  Table YEAR 1957 1958  11.2: Factor WIND  3  44.39 49.17  1959 1960  49.94  1961 1962 1963 1964  53.40 56.45 55.94 58.41  1965 1966 1967  53.00  Price  Indexes  PMIND  4  in the PTIND  5  70.67  81.72  72.82  82.88  73.78 75.52  83.17  76.84 78.73 81.94  85.33 88.15  83.88  91.25 97.20  Forest  Industries,  PEIND  6  1957-84 RIND  7  1  PXIND  8  90.79 94.81  54.39 55.26  146.63 143.50  93.30 93.45  60.58 66.67  184.80 18.33  93.96 98.49 97.24  72.75 68.36  194.83 191.07  67.17  193.02  98.90  67.86  183.88  62.01 67.80  86.51 90.77 91.87  101.34 101.77  88.21 99.65  67.99 71.64  253.96 220.13  74.61 80.73  91.53 89.54  96.50 93.47  95.15 95.88  72.49 82.73  200.90  84.86 90.71  91.65 94.87  95.79 97.88  100.21  85.90  237.71  76.75  91.26  128.36  100.00 102.33  100.00 101.20  100.00 95.50  100.00  1972  100.00 106.62  1973 1974  116.92 136.23  108.60 125.97  104.59 120.29  101.53 137.10  58.86 26.86  100.00 127.33 209.71 275.41  1975 1976 1977  148.22 180.37  143.21 160.26  137.00. 145.46  90.85 110.86  168.41 180.98 196.36 235.39  157.48 173.80 193.28 229.12  156.22 184.98 228.67 162.12 302.67  264.29 286.88 297.92 312.07  1968 1969 1970 1971  1978 1979 1980  199.50 215.71  1981 1982  233.19 258.08 285.77 18.11  1983 1984  345.28 353.88  Prices WIND PMIND 'PTIND PEIND  86.89  225.43  137.38 164.59  196.94 199.51 222.14 300.74  324.73  138.25 187.89  474.91 414.56  255.28 273.31  418.27 514.47  291.44 312.29  258.39 148.35  282.69 298.33  654.46 613.88  368.20 466.04  134.55 159.44  are indexed to the base year 1971 =100; refers to labour price index; refers to materials' price index; refers to stumpage rate index; refers to energy price index;  |RIND refers to the index of rate of return PXIND refers to the index of tax rate.  to  durable  capital;  115  Table  YEAR 1957  11.3: Factor  Price  WIND  3  Indexes  for the  PEIND  Logging Industry,  RIND  6  7  PMIND  PXIND  8  43.10 58.66  111.62 111.95  63.42 63.86  84.50 85.40  10.5.7 28.87  1959 1960  56.40 58.91  112.05 112.15  67.82 72.09  85.70 86.10  46.81  1961 1962  52.61  112.46  58.78 51.64  112.89  76.46 72.30  87.40 90.00  49.81 59.22  113.09  70.97  54.25  111.05 114.74  71.66  93.00 99.30  70.41 117.90  72.04 71.37  103.60 104.00  145.40 106.37  73.84  97.50  81.62  94.30  82.83 144.67  85.27  36.60  1965 1966  58.95 64.93  116.98  1967  73.01 80.11  98.60 120.09  84.92 90.30  121.49 99.56  90.35  96.80 98.80  123.67 100.62  100.00 110.36  100.00 125.46  100.00 90.65  100.00 -101.20  100.00 147.42  1973 1974  120.74 139.50  122.75 147.07  41.15  104.20 119.70  227.03 193.17  1975 1976 1977 1978  153.96 186.13  185.46 205.76  96.90 112.92  136.20 143.00  201.50 216.24  226.31 243.24  140.35 165.84  ' 155.70 173.00  164.50 182.46 232.74  1979 1980  273.71 334.55 480.30 657.03  153.09 195.24  193.50 232.60  430.69 542.56  1981 1982  235.90 259.53 296.97 324.99  289.59 315.02  259.20 277.50  300.31 263.18  1983 1984  341.60 328.89  914.83 980.29  362.18 426.01  286.80 303.00  242.36 304.44  1968 1969 1970 1971 1972  65.19  'Prices are indexed to the base year 1971 = 100; W I N D refers to labour price index; P M I N D refers to materials' price index; ^PEIND refers to energy price index; 3  4  7  4  1958  1963 1964  6  1957-84 1  R I N D refers to the index of rate of return P X I N D refers to the index of tax rate.  to  durable  capital;  230.15  Table  II.4: Factor  YEAR  Price  WIND  1957  3  Indexes  PEIND  for  the  Wood  PMIND  6  Industries,  1957-84 1  RIND  6  4  PXIND  8  1958  40.75 43.21  123.79 112.91  68.70 70.90  55.13 55.27  58.93 55.66  1959 1960  43.60 46.63  112.39  71.10  59.41  112.83  72.90  64.36  112.70 99.84  1961 1962  49.84 52.32  106.29 128.28  74.70 78.10  69.50 65.58  111.75 131.01  54.63 57.16  123.65 121.06  81.50 85.70  63.35 62.66  127.10 131.84  1965 1966  60.83 65.76  117.19 110.77  88.90 89.50  61.82 62.75  91.09 77.65  1967  72.37  116.41 •  91.60  1968  78.38  115.01  89.50  72.81 85.27  161.86  1969 1970  82.34 88.45  111.41 98.77  91.00 93.50  86.93 91.82  164.61 60.43  1972  100.00 105.75  100.00 100.36  100.00 101.20  100.00 86.46  100.00 169.25  1973 1974  118.58 138.46  109.89 124.16  106.00  56.60  122.50  20.16  312.15 176.71  1975 1976  154.91 183.23  143.94 175.57  140.10 156.40  83.15 101.65  143.83 205.44  1977 1978  207.47 222.58 246.21 273.45  197.10 210.18 238.82 272.69  165.00 176.60 191.80 213.60  130.83 154.60 125.21 161.97  293.10 317.10 350.52 364.07  343.91 440.39  237.80 254.60  257.64  474.01 496.16  264.30 277.40  1963 1964  1971  1979 1980 1981 1982 1983 1984  :  281.39 341.34 431.65  Prices are indexed to the base year 1971 = 100; 'WIND refers to labour price index; PMIND refers to materials' price index; 'PEIND refers to energy price index; 'RIND refers to .the index of rate of return PXIND refers to 'the index of tax rate.  to  durable  capital;  92.75  261.04 374.33 446.50 212.14 153.36 126.060 142.60 128.71  117  Table  YEAR  II.5:  Factor  Price Iindexes  WIND  3  for  the  PMIND  Paper &  Allied  PEIND  6  7  Industries,  RIND  4  1957-84  1  PXIND  8  47.81 49.44  69.90 72.10  80.06  51.34  77.77  51.24  73.80  74.87  52.49 58.74  53.95 56.24  75.60  77.53  65.35  233.90  76.50  58.07  76.90  82.96 80.08  71.81 67.10  232.50 211.24  1963 1964  59.51 61.71  79.90 84.60  65.86 66.59  204.11  1965 1966  64.51  89.90 91.60  81.48 82.08 83.84  66.88 72.41.  301.70 255.87  1967  76.33  89.30  86.41  82.25  87.70  85.62  71.26 82.34  213.34  1968 1969 1970  86.05 91.57  90.80 95.60  87.39 86.84  85.98 91.76  198.05 116.28  1971 1972  100.00 106.79  100.00 103.20  100.00 99.16  100.00 86.80  1973 1974  115.28 133.44  110.90  58.62  129.10  108.09 150.94  100.00 105^49 160.77  1975 1976 1977 1978  141.24 177.34  146.20 164.90  178.95 210.73  195.47 214.25  172.20 185.00  261.70 273.01  91.68 112.66 138.78 167.43  1979 1980  226.26 249.85  199.90 253.40  345.61 405.97  139.40 195.89  1981 1982  279.88 319.53  286.30 313.70 326.00 340.70  492.49 600.33 661.93 662.53  305.29 328.04  1957 1958 1959 1960 1961 1962  1983 1984  70.35  347.86 361.77  84.26  25.30  389.02 497.61  Prices are indexed to the base year 1971 = 100; YEAR refers to time variable; W I N D refers to labour price index; PMIND refers to materials' price index; 'PEIND refers to energy price index; ;  'RIND refers to the index of rate of return PXIND refers to the index of tax rate.  to  durable  capital;  202.15 197.04 230.59  188.12  191.44  336.01 234.66 197.82 196.99 262.41 499.00 524.45 314.97 149.93 118.50 164.62  Table II.6:  YEAR  WAGE  1  Factor  Incomes  MATE  in the  FUEL  2  (in  STUMP  3  million  Forest  Industries,  4  1957-84  TAX  5  PROFIT  7  dollars)  1007.5  1072.2  149.6  72.6  113.8  287.6  404.8  1958 1959  946.5 1016.4  1074.9 1147.6  143.5 149.4  64.9 67.4  112.9  304.1  156.5  351.7  400.3 400.2  154.6 164.1  77.7 79.7  159.0 163.8  388.1 428.9  331.7  173.4  77.8 63.7  168.6 171.0  417.4 412.2  450.3 432.1  197.6 214.4  86.7 85.3  180.5 259.4  439.9 480.5  406.5  1960  1078.7  1961  1138.0  1962  1198.5 1231.0  1192.8 1195.5 1218.7 1266.4  1331.9  1520.7  1965  1434.0  1588.8  1966 1967  1612.9 1750.9  1692.7 1619.9  231.8 242.9  87.6 79.8  237.7 2li 4  645.0  1968 1969  1847.6 2006.0  1598.6 1621.3  254.5 280.0  97.5 125.3  235.8 260.7  772.5 816.5  1970 1971  2077.2 2267.6  1625.5 3450.8  279.4 317.5  94.9 98.7  142.1 142.9  896.8 1077.0  1972 1973 1974  2532.4 2995.5  3969.3 4830.2  346.5 398.5  150.3 286.4  203.6 357.4  1975  3539.5 3616.7  5897.9 5750.1  223.0 106.9  468.2 280.3  1976 1977  4508.3 4918.2  7140.0 7782.1  569.9 562.6 747.7 901.4  119.5 146.9  2045.3  877.3 895.6  1978 1979  5641.9 6270.0  9048.9 11014.3  1076.6 1243.3  271.9 504.4  328.0 374.5 551.2 887.2  1046.0 898.3 778.0 1373.2 1714.4 2495.9 2500.9  1072.5 2172.2  1980 1981  6818.3 7299.6 7094.4  12202.6 13016.0  1411.5 1702.7 1885.7  452.4 209.6  768.9 476.3  3309.1 4893.2  1388.4 -373.3  1982 1983 1984  179.8  :  534.4  276.0  503.9 412.5 227.7 216.2 375.8 196.7 31.2 431.0 1310.9 2150.7 1015.2  7928.6  11671.6 13470.9  2108.9  154.9 207.4  238.1 252.7  5134.9 5804.8  -2233.8 -1895.0  8365.5  14845.5  2375.7  230.9  313.8  7087.9  -2033.3  I W A G E refers total labour compensation; M A T E refers to total value of materials;  2  F U E L refers to total value of energy purchased and used; S T U M P refers to total stumpage paid by the industries; ^TAX refers total tax share; 3  4  7  6  1957  1963 1964  6  KAPT  K A P T refers to total share of durable PROFIT refers to total profit share.  capital  and  money  capital;  119  Table  YEAR  II.7  WAGE  Factor  Incomes  MATE  1  FUEL  2  (in  1  3  4  5  b  7  3  Logging  STUMP  Industry,  TAX  4  1957-84  5  KAPT  6  PROFIT  7  million dollars)  1957  312.7  73.7  20.6  60.8  0.8  59.3  118.2  1958 1959  243.7 281.8  58.7 66.2  16.4  2.0 2.9  58.8 65.4  77.4  1960  308.3  73.7  20.8  53.6 56.6 60.1  4.0  71.4  1961  301.3  21.3  61.6  3.8  76.2  1962 1963 1964  312.2 295.6  74.3 75.4  107.7 91.4  78.8  21.8 22.5  63.3 52.2  4.6 5.0  73.6 71.8  320.7  84.9  24.8  338.3  95.6  26.5  76.2 74.4  9.0 11.4  76.5  1965  82.5  114.8  1966 1967  378.4 403.8  29.6 30.8  75.6 70.1  9.1 7.0  90.9 103.8  133.2 111.2  1968 1969  398.3 442.6  109.1 116.1 117.4  30.8 34.4  80.7  132.8  105.0  12.3 11.5  119.9 129.7  124.9 163.3  1970 1971  447.5 448.3  165.0 165.8  29.1 30.3  79.3 81.6  9.2 8.9  141.3 150.5  96.0 90.3  1972 1973 1974  500.2 662.4  179.9 232.5  115.7 226.7  14.2 25.5  147.6 139.7  166.9 281.4  782.2  21.3 15.0  125.7  . 88.1  213.8  314.8 111.4  1976 1977  286.8 342.9 376.2 433.3  179.4  785.8 876.7 938.5  36.8 49.9 68.4 64.4 70.9 74.2  97.0 121.5  17.3 22.4  254.9 303.1  199.1 175.9  1978 1979  1097.0 1265.5.  487.9 634.8  84.6 100.6  157.3 358.4  1342.5 1370.3  701.3 712.9  121.0 158.9  23.7 47.6 61.7 30.0  369.0 381.5  1980 1981  220.6 403.6 377.7 163.0  487.5 656.7  157.3 -174.0  1982 1983 1984  1244.9 1501.2  543.0 742.8  178.9 199.7  126.5 170.7  21.1 24.2  660.9 724.0  -276.8 -91.4  1606.5  935.9  215.2  194.4  32.7  833.7  -281.4  1975  2  in the  WAGE MATE FUEL  refers refers refers  total to to  labour  total value total  value  18.5  compensation; of of  materials; energy  S T U M P refers to total stumpage T A X refers total tax share;  paid  K A P T refers to total share of durable P R O F I T refers to total profit share.  purchased by  the  and  used;  industries;  capital and  money  capital;  91.2  102.6 93.8 101.4  Table  YEAR  II.8  WAGE  1  Factor  Incomes  MATE  FUEL  2  (in 1957  270.9  1958 1959  273.0 283.4  1960 1961  291.0 321.1  1962 1963  344.1  1964  b  7  4  TAX  1957-84  KAPT  5  6  PROFIT  7  million dollars) 11.9  17.0  57.6  104.5  10.8  16.9 35.6  58.2 69.4  120.8 113.7  544.8 563.2  17.6 18.0  30.0 32.0  74.2 81.1  36.8 17.3  371.7  609.6 680.8  23.6 25.2  14.5 11.4  42.0 42.0  81.2 81.8  127.4 91.2  399.0 432.9  770.3 807.2  27.8  10.5 10.9  46.5  . 86.5 93.1  102.7  1965 1966 1967  468.0 502.7  856.0  30.7 31.3  12.0 9.7  29.3  893.3  35.6  105.9 124.7  105.8 88.0  1968 1969  544.4  1018.8 1169.2  33.8 37.4  16.8 20.3  63.1 67.2  157.7  585.5  179.0  144.6 132.2  1970 1971  595.8 702.9  1107.5 1261.6  36.2 43.5  15.6 17.1  25.0 41.5  194.8 217.5  -13.8 55.0  1972 1973 1974  829.5 1009.3  1578.0 2062.0  34.6 59.7  83.2 164.3  2155.2 2060.6 2725.4 3110.4  43.6 18.9 22.4 25.4  90.5 70.6  233.0 232.5 211.7  276.7 570.6  1123.6 1153.7  53.0 64.5 74.9 79.4  1980 1981 1982 1983 1984 'WAGE  5  STUMP  Industries,  11.4  1478.4 1711.2 2012.4  1978 1979  4  3  Wood  15.7  1976 1977  3  the  16.6 17.2 17.7 20.4  1975  2  in  MATE  refers refers  541.9  29.6  105.0 130.4 158.7  2284.7  3814.0 4725.6  2440.0 2510.0  4715.9 4708.5  205.0 244.6  2343.5 2719.6  4069.5 5260.7  272.8 323.1  74.7 46.6 28.4 36.7  2852.8  5620.9  351.2  36.4  to" total to  517.9 511.4  total  labour value  183.0  51.2 100.8  33.6  635.6 688.6  386.0 659.6 751.1  136.6 99.2  881.0 1246.6  7.8 -408.6  70.6 99.0  1253.1 1432.6  -959.0 -258.5  93.8  1722.3  -618.2  materials;  capital  and  money  321.6 134.4  423.1 505.5  F U E L refers to total value of energy purchased and used; S T U M P refers to total stumpage paid by the industries; T A X refers total tax share; K A P T refers to total share of durable P R O F l T refers to total profit share.  331.0  109,3  118.0 159.1 242.1 296.7  compensation; of  '•'  capital;  216.4  121  Table  II.9:  YEAR  Factor Incomes  WAGE  MATE  1  in the  2  Paper &  FUEL (in  6  7  KAPT  6  PROFIT  7  dollars)  423.8  891.6  113.3  96.0  179.4  173.5  429.8 451.2  885.9  110.5  94.0  194.7  938.2  113.8  118.0  227.9  194.5 184.3  1960 1961  479.3 515.6  116.0 122.2  125.0 128.0  253.2 282.8  176.5 156.0  1962  542.1  1963 1964  563.8  978.9 1020.3 1080.4 1140.4  128.0 132.2  122.0 124.0  275.5 272.0-  233.6  1965  612.0 662.9  1264.8 1385.5  145.0 158.3  125.0 214.4  288.6 320.2  288.1 167.0  1966 1967  766.6 844.4  1559.4  171.5 180.9  360.9 449.8  150.3 -4.8  1968  904.9 978.1  1753.8 1920.6 1952.7 2023.4  189.9 208.2  199.3 168.8 160.4  546.3 579.7  -104.7  182.0  214.0 243.7  107.9 92.5  637.3 709.0  37.8 -114.1  106.2 167.6 356.4 194.7  668.7 530.7  -15.9 454.3  441.8 832.8 1039.7  1513.1 765.1 458.5 326.5  1642.6  1970 1971  1033.9  1972  1202.6  1973 1974  •1323.8 1633.6 1677.2  2211.3 2535.7  256.8 284.0  3455.9 3346.7  2153.2 2268.4  4038.5 4238.4  426.6 418.8 571.7  1978 1979  2532.6 2719.8  4747.0 5654.0  833.3 959.7  1980 1981  3035.8 3419.2  6785.5 7594.7  1085.4 1299.3  542.9 570.6 347.1  1982 1983 1984  3506.0 3707.7  7059.0 7467.5 8288.7  1434.0 1586.0 1809.3  'WAGE  5  5  1957-84  1958 1959  1116.3  1975 1976 1977  3  million  TAX  Industries,  1957  1969  2  3  Allied  MATE  3906.3 refers refers  total to  labour  696.8  192.7 193.0 285.4  1243.9  of  8.3  1499.3 1440.1 1953.8 3007.7  247.5 1053.3  129.5  3260.7 3715.6  187.3  4602.3  -1037.5 -1612.5 -1204.2  146.4  compensation;  total value  207.4  materials;  F U E L refers to total value of energy purchased and used; T A X refers total tax share; K A P T refers to total share of durable capital and money capital; P R O F I T refers to total profit share.  1210.0 191.4  Table  11.10: Indexes  1957  100.09  43.97  1958 1959  84.89 89.76 89.74  42.78 45.08 45.77  93.98  45.08  93.62 97.04  Ml  in  the  Forest  T|3  Industries,  1957-84  F|4  K|5  90.05  51.90  53.60  79.37 82.11  47.70 50.47  56.46 57.44  93.90 94.62  52.12 55.00  58.27  89.43 70.69  55.46 58.26  61.22 61.47  2  60.09  1962 1963 1964  100.55  44.86 44.78 50.94  101.98  50.72  90.38 85.30  62.93 76.57  63.77  1965 1966 1967  104.90 103.48  53.39 51.28  87.16 83.79  73.27 80.43  70.02 85.74  1968 1969  100.92  51.73  105.62  83.61  90.89  104.25  51.25  132.56  88.00  1970 1971  100.99 100.00 104.74 112.97  49.65 100.00  98.25 100.00  114.65 100.00  89.80 94.54 100.00  112.39 128.88  150.46 277.38  114.27 123.64  106.37 109.97  114.57  68.36  135.66 116.35  187.81 79.09  130.93 113.44  105.70 110.50  1976 1977  107.60 110.22 108.71  129.09 133.90  83.25 94.49  127.32 124.17  1978 1979  115.34 118.57  144.88 162.54  158.47 264.37  209.19 129.39  115.26 121.43 124.17  1980 1981  116.50 112.65 98.34  150.21 142.71  200.03 83.17  136.91 128.22  125.79 122.21 128.01  101.26  117.89 131.02  57.42 74.32  115.45 101.50  136.19 142.57  104.25  137.85  78.40  121.90  1.40.18  1975  1982 1983 1984 refers TI FI  Quantities  LP  1972 1973 1974  3  Factor  YEAR  1960 1961  4  of  to  index  of  labour employed  (1971 = 100);  refers to timber quantity index (1971 = 100); refers to fuel quantity index (1971 =100);  5|<l refers  durable  capital  quantity  index  (1971 = 100).  123  Table  11.11: Indexes of  Factor  Quantities  in  the  Logging  Industry,  1957-84  YEAR  LP  1957  161.84  61.04  88.09  52.57  65.34  1958  92.65 111.47  48.53 54.65 61.24  76.87 80.89  41.48 46.58  66.36 66.42  85.53 86.42  51.63 51.26  68.10 69.76  1959 1960 1961 1962  116.76 127.74  Ml  T|3  2  62.62  Fl  4  K|5  118.48 127.68  63.89 65.70  86.14  1963  68.81  50.51 51.10  70.08 70.60  1964 1965  131.90 127.99  73.89 76.31  94.05 87.96  51.54 55.67  73.30 77.61  1966 1967  129.99 123.37  83.46  89.04 88.12  63.28. 71.81  83.39  86.91  1968 1969  110.91 116.24  104.80 132.94  75.09 82.75  96.75 95.82  1970 1971  110.54  84.73 93.49 96.54  100.00  100.00  100.73 100.00  96.80 134.53  1974  101.11 122.38 125.07  98.38 100.00 140.14  1975  1972 1973  266.59  113.86  153.71 114.70  183.62 79.27  1976' 1977  105.07 103.90  113.85 108.37  1978 1979  113.16 119.67  114.92 121.45  83.20 95.59 156.27  1980  115.38 102.93 85.44 98.03  119.55 109.29 89.94 72.13  108,96  72.46  1981 1982 1983 1984  107.19 134.54  92.15  99.57 100.00 104.17 114.75  144.48 151.81 158.64 167.84  116.27 124.09  170.08 197.83  137.50 135.26 134.46 131.98  55.87 72.94  181.83 165.85 118.01 156.19  78.63  186.26  123.85  255.56 198.99 77.04  refers to index of labour em ployed (1971 = 100); I refers to materials' quantity index (1971 = 100); refers to timber quantity index; refers to fuel quantity index (1971 = 100); refers durable capital quantity index (1971 = 100).  132.66 134.34  130.65 128.08  Table  YEAR  5  Ml  in  the  Wood  Tl  2  3  Industries,  Fl  4  1957-84  Kl  5  94. 58  29. 09  101. 21  33. 75 35. 12  93. 69 89.,09  1960 1961  88..76 91..65 93..55 96..77  36. 14 44. 25  141..53 141. 38  42. 33 46. 80  108. 87 82.,09  1965  99.,31 101..20  52. 69 57. 99  71. 64 72. 09  71. 24 71. 97  1966 1967  101.,23 98..80  63.,79 61.,82  78,.34 61..92  75..80 77..29  1968 1969  98..80 101..14  67. 63 77. 20  90.,22 101. 84  75.,83 81,.54 84..84  1970 1971  95..82 100.,00  84..42 100..00  109..74 130. 65 97,,57 100.,00  93.,88 100.,00  93 .86 100..00  1972  111..58 121..08  121.,29 134.,91  199..73 329,.19  123..59 154.,19  112,.98 123 .90  1975  115,.43 105..94  208..31 78.,68  139.,45 116..58  126,.36 136,.51  1976 1977  114.,77 117..33  138.,62 126.,81 137..59 . 152,.04  83,.91 90 .10  138..12 149,.41  142,.43 149 .18  1978 1979  128,.62 132..00 126,.93 121 .82  158,.42 167,.78 177 .96 185 .07  1982 1983 1984  105,.13 110,.37  163,.48 142,.41 156,.70  169,.69 307,,43 204 .48 114,.56  171 .18 195,.29  1980 1981  173.,60 176,,11 172..84  126 .69 157 .76  111 .46  162 .73  65 .16 81 .11 76 .84  1973 1974  3  1  Quantities  89. 89 92. 46  1964  4  Ll  Factor  1958 1959  1963  'Ll MI TI FI KI  of  1957  1962  2  11.12: Indexes  refers refers refers refers refers  to index of labour employed (1971=100); to materials' quantity index (1971 = 100); to timber quantity index (1971 =100); to fuel quantity index (1971 = 100); durable capital quantity index (1971 = 100).  59..75 57.,17 60. 40  55. 68 55. 93 58.,34  59. 23 59..75 61. 86  59.,24 61. 22  66. 20  63..05 65. 05 68. 78 73..44  174,.99 156 .94  160 .61  62. 04  193 .64 199 .80 197 .34  125  Table  11.13: Indexes  of  Factor  Quantities  YEAR  4  5  1  Ml  Paper & Allied  2  4  1957-84  Kl  5  79.39  63.04  58.08  51.06  1958 1959  77.85 78.86  60.72 62.83 .  58.31 62.35  54.84 55.67  1960 1961  79.57 82.12  63.99 65.91  61.44 60.47  56.32 58.15  1962  83.62  69.43  65.56  1963  84.85  70.53  66.55  59.50 59.52  1964 1965  88.83 92.05  73.88 76.16  72.48 77.49  61.81 66.66  1966 1967  97.61 99.08  84.13 90.90  83.51 85.89  66.92  1968 1969  98.53 101.81 101.14  98.83 104.54  90.98 97.75  92.00 89.89  100.94  100.00  100.00  101.11 100.00  93.81 100.00  1972  100.87 102.86  105.90 113.00  106.25 107.83  105.24  1973 1974 1975  109.65 106.36  132.30 113.13  115.98 96.04  99.30 102.41  1976 1977  108.76 103.95  121.03 121.64  111.33 109.26  106.29 113.06  1978 1979  105.88 107.67  126.81 139.78  125.25 113.95  114.28 114.85  1980 1981  108.84 109.43  132.34 131.10  109.71 108.25  107.88 114.70  1982 1983 1984  98.28 95.47  111.21 113.20  98.02 98.32  124.21 131.94  96.72  120.23  112.06  129.87  'U refers to index of labour employed (1971 = 100); M I refers to materials' quantity index; FI refers to fuel quantity index (1971 = 100); KI  Fl  Industries,  1957  1970 1971  2  LI  in the  refers  durable  capital quantity  index  (1971 =100).  86.90  106.02  Table  11.14: Annual Growth Rates  VARIABLE  LOGGING  9  GNVAL Output Labour  Materials Energy Stumpage Tax  PAPINDUSTRIES  refers  refers  ETRS  ETRP  GNVAL  GNPR  9.80 9.40  5.90 8.50  -  inc  9.00 9.00  5.10  dec  -  -  6.60  inc  inc  1 1.20  7.50  inc  inc  4.80  inc  dec  14.50  4.80  inc  dec  4.60  inc  dec  10.00  5.30  inc  dec  9.00  5.90  no  inc  9.30 6.10  7.90  inc  1 1.40  4.60  inc  7.60  inc  inc  dec  6.50  5.30  dec  dec dec  10.90  4.60  inc dec  10.60  inc  inc  7.60  3.80  dec  dec  -  3.90  -  -  0.60  dec  dec  -  -  -  -36.90  -  -  -30.70  -  -  -  to the Paper  expected decreasing  & Allied  7  (%/a) in the nominal price  trend in real  factor  factor  8  inc  -  Industries;  (%/a) in the nominal value of  trend in relative  -  no  ETRP  12.30  6  7.80  ETRS  15.00  expected  to  GNPR  inc  to  refers  GNVAL  dec  refers  inc  PAPINDUSTRIES  inc  ETRS  to  INDUSTRIES  1957-84  6.80  to annual growth rate  to  -  inc  Industries.  4.80  annual growth rate  refers  5  in the Constituent  9.70  to  refers  ETRP  and Nominal Prices  13.00 10.80  refers  dec  4  -  8.00  Incomes  dec inc  GNPR ETRP  Output. Factor  WOOD  ETRS  3  5.00  12.10 -44.37  Profit  of  INDUSTRY  GNPR  2  7.50 7.00  Capital Interest  GNVAL  in Nominal Values  of  relevant  variable;  the relevant  variable;  shares;  price;  trend;  increasing trend;  'no refers  to no  change;  'VARIABLE  refers  to  either  output  or  any  factor  input  used in these  industries.  ro ON  APPENDIX III  Table  111.1: Relative  Factor  Shares  in the  Forest  Industries,  1957-84  YEAR  SL1  1957 1958  32.4 31.1  7.6 8.3  1.6 1.6  34.5 35.3  4.8 4.7  2.3 2.1  3.7 3.7  13.0 13.4  1959 1960  30.9 31.9  8.6 9.3  2.1 2.1  4.5 4.6  2.0 2.3  4.7 4.7  12.2  1961 1962  33.0 32.3  10.3 9.2  2.1 2.1  34.9 35.3 34.7  4.5  8.0 12.1  1963 1964  32.8 31.2  8.9 8.3  2.0 2.0  4.8 4.6  2.3 2.1 1.7  4.7  32.9 33.7 35.7  4.8 4.7  4.5 4.2  11.5 11.8  1965  32.1 33.5  2.3 2.6  35.5 35.2  4.8 4.8  36.6 36.8  8.5 8.5 10.6 12.2  2.9 3.2  33.9 31.8  5.1 5.1  1.8 1.7 1.9  5.8 4.9 4.4 4.7  9.1  1966 1967  4.8 4.3  1969 1970 1971 1972  36.6 39.1  11.5 13.2  3.4 3.6  5.1 5.2  2.3 1.8  4.7 2.7  6.8 3.7  30.7 29.2  11.0 8.7  3.5 3.4  29.5 30.6 46.7 45.7  4.3 4.0  1.3 1.7  1.9 2.3  4.3 5.0  1973 1974  27.0 26.0  4.8 1.7  3.2 3.4  11.8 15.8  28.5 29.2  6.4 6.7  45.2 46.2  3.6 4.2 4.4  2.6 1.6  1975 1976 1977  3.3 4.0 4.4 4.4  4.8  0.8 0.8  2.2 2.1  8.0 • 5.7  28.8 28.0  8.0 8.3  4.0 4.1  45.6 44.9  5.3 5.3  0.9 1.3  2.2 2.7  5.2 5.3  5.8 7.1  4.4 5.4  44.8 46.3  11.2 14.5  6.8 7.0  47.8 48.7  5.0 5.3 6.2 7.9  2.0 1.7  1981 1982  25.5 25.9 26.8 29.6  3.6 2.9 1.7  8.8 5.3 -1.4  1.0  -9.3  1983 1984  28.4 26.8  15.3 17.1  5.5 5.6  48.3 47.6  7.6 7.6  0.9 1.0  -6.8 -6.5  1968  1978 1979 1980  SK  2  SK1  3  SM  4  43.6 43.3  'SL  refers to relative labour share (%/a); S K refers to relative capital share (%/a); S K 1 refers to relative share of Interest income S M refers materials' relative share (%/a); 5 F refers to relative share of stumpage (%/a); %T refers relative share of energy (%/a); T A X P T refers to relative share of taxes (%/a); S P refers to relative profit share (%/a). 2  3  4  S  7  8  (%/a);  SF5  ST  6  2.0 1.9  0.8 0.6 0.7 0.7  TAXPT  7  SP  8  9.8  8.6  Table  111.2: Relative:  Factor Shares  in  the  Logging  Industry,  1957-84  YEAR  SL1  1957  48.4  7.7  1.5  11.4  3.2  9.4  0.1  18.3  1958  47.7  9.9  1.6  3.2  15.2  48.4  9.3  2.0  10.5 9.7  0.4  1959  11.5 11.4  0.5  15.6  1960  47.7  1.9  11.4  0.6  16.7  47.8  1.9  11.8  3.2 3.4  9.3  1961  9.1 10.1  9.8  0.6  14.5  1962  47.8  9.3  2.0  11.5  3.3  9.7  0.7  15.7  1963  47.7  9.7  1.9  12.7  3.6  8.4  0.8  15.1  1964  46.2  9.1  1.9  12.2  3.6  11.0  1.3  1965  45.5  9.0  2.1  12.9  3.6  10.0  1.5  14.6 15.4  1966  45.8  8.6  2.4  13.2  3.6  9.1  1.1  16.1  1967  47.9  9.7  2.6  13.8  3.6  8.3  0.8  13.2  1968  45.0  10.7  2.9  13.3  3.5  9.1  1.4  14.1  1969  43.4  9.6  3.1  13.0  3.4  10.3  1.1  16.0  1970  46.2  11.1  3.5  17.0  3.0  8.2  0.9  9.9  1971  45.9  12.3  3.1  17.0  . 3.1  8.4  0.9  9.2  1972  47.1  9.7  14.4  5.5  3.1  10.0 14.0  1.2  40.9  15.5 14.4  3.2  1973  3.0 3.1  1.6  17.4  1974  44.0  3.2  3.8  16.1  3.8  10.1  1.2  17.7  1975  48.5  8.9  4.3  21.1  4.0  5.4  0.9  6.9  1976  46.3 45.4  9.5  19.9  3.7  5.1  20.9  3.6  5.9  0.9 1.1  10.5  10.9  4.0 3.7  11.2 7.8  3.9 4.2  20.0 19.9  3.5  6.4  3.1  9.0 12.6  1.0  1979  44.9 39.6  1.5  11.2  1980  41.3  9.7  5.3  3.7  11.6  1.9  4.8  1981  47.0  15.7  6.8  21.6 24.4  5.4  5.6  1.0  -6.0  1982  49.8  19.7  6.7  21.7  7.1  5.1  45.9  17.0  5.1  22.7  6.1  5.2  0.8 0.7  -11.1  1983 1984  45.4  17.9  5.7  26.4  6.1  5.5  0.9  -7.9  1977 1978  T  2  3  4  5  B  7  8  SK  SK1  2  S L " refers  to  relative  labour  share  (%/a);  SK  to  relative  capital  share  (%/a);  SK1 SM  refers refers refers  to  relative  materials'  SF  refers  to  ST  refers  relative  TAXPT SP  refers  refers  to  relative to  share  relative share  share relative  relative  of  of of  of  share  income  (%/a);  stumpage  energy  share  profit  Interest  share  SM  3  (%/a);  (%/a); taxes (%/a); (%/a).  4  (%/a);  SF5  3.2  ST&  TAXPT  7  SP8  8.5  -2.8  Table 111.3: Relative Factor Shares in the Wood Industries, 1957-84 YEAR 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 977 1978 1979 1980 1981 1982 1983 1984  SL"" 27.2 27.1 26.4 28.7 30.5 27.7 28.5 27.6 28.5 29.1 29.8 27.5 26.7 30.4 30.0 26.9 24.2 27.9 30.0 29.0 28.4 26.6 25.3 28.8 29.7 33.1 28.3 28.3  SK  2  4.0 4.0 4.2 4.9 5.3 4.3 4.0 3.7 3.7 3.8 4.3 4.6 4.4 5.8 5.6 4.1 2.2 0.8 3.9 3.7 4.2 4.2 3.0 4.5 7.4 10.1 9.3 11.1  SK1  3  1.7 1.7 2.2 2.4 2.4 2.2 2.2 2.3 2.5 2.8 3.1 3.3 3.7 4.2 3.7 3.4 3.4 4.4 4.7 4.6 4.1 4.1 4.6 5.9 7.3 7.6 5.6 6.0  SF  4  1.2 1.1 1.0 1.7 1.7 1.2 0.9 0.7 0.7 0.7 0.6 0.8 0.9 0.8 0.7 1.1 1.4 1.1 0.5 0.4 0.4 0.7 1.1 0.9 0.5 0.4 0.4 0.4  'SL refers to relative labour share (%/a); SK refers to relative capital share (%/a); SK1 refers to relative share of Interest income (%/a); S M refers materials' relative share (%/a); SF refers to relative share of stumpage (%/a); ST refers relative share of energy (%/a); TAXPT refers to relative share of taxes (%/a); SP refers to relative profit share (%/a).  2 3 4  5 6  7 8  SM  5  52.0 50.7 50.5 53.8 53.5 49.0 52.2 53.4 53.2 53.2 53.0 51.5 53.4 56.5 53.9 51.1 49.5 53.6 53.5 53.5 51.6 50.3 52.3 55.7 55.7 57.5 54.7 55.9  ST  6  1.6 1.6 1.6 1.7 1.9 1.9 1.9 1.9 1.9 1.9 1.8 1.7 1.7 1.8 1.8 1.7 1.5 1.9 2.1 2.1 2.2 2.1 2.0 2.4 2.9 3.8 3.4 3.5  TAXPT  7  1.7 1.7 3.3 3.0 3.0 3.4 3.2 3.2 2.2 1.8 2.1 3.2 3.1 1.3 1.8 2.7 3.9 2.2 1.8 2.3 2.6 3.2 3.3 1.6 1.2 1.0 1.0 0.9  SP  8  10.5 12.0 10.6 3.6 1.6 10.2 7.0 7.1 7.2 6.6 5.2 7.3 6.0 -0.7 2.3 8.9 13.7 8.0 3.5 4.2 6.4 8.7 8.3 0.1 -4.8 -13.5 -2.7 -6.1  130 Table I II.4: Relative Factor Shares in the Paper & Allied Industries, 1957-84 YEAR  SL"  SK  1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984  22.6 22.5 22.2 22.5 23.2 23.0 22.9 22.5 22.8 23.9 25.7 26.2 25.2 25.9 27.4 27.1 25.0 20.9 23.2 25.5 25.3 25.0 22.0 20.7 21.5 24.4 24.7 22.2  7.9 8.5 9.1 9.7 10.6 9.5 9.0 8.5 8.6 8.5 10.6 12.4 11.2 12.2 13.8 11.6 6.6 1.8 7.3 8.0 9.9 10.6 7.3 8.1 12.4 16.0 19.3 20.7  -  2  SK1  3  1.7 1.7 2.1 2.1 2.1 2.1 2.1 2.1 2.4 2.7 3.1 3.4 3.7 3.8 3.6 3.5 3.4 3.8 4.2 4.3 4.0 4.1 4.3 5.2 6.5 6.7 5.5 5.4  SM  4  47.5 46.4 46.1 46.0 45.8 45.9 46.2 46.4 47.6 48.6 50.0 50.8 49.5 49.0 49.7 49.9 47.9 44.1 46.2 47.8 • 47.3 46.8 45.7 46.3 47.9 49.1 49.8 47.1  'SL refers to relative labour share (%/a); SK refers to relative capital share (%/a); SK1 refers to relative share of Interest income (%/a); SM refers materials' relative share (%/a); SF refers relative share of energy (%/a); TAXPT refers to relative share of taxes (%/a); &SP refers to relative profit share (%/a). 2  3  4  6  7  SF  6  6.0 5.8 5.6 5.4 5.5 5.4 5.3 5.3 5.4 5.3 5.5 5.5 5.4 5.4 6.0 5.8 5.4 5.4 5.8 6.8 7.8 8.2 7.7 7.4 8.2 10.0 10.6 10.3  TAXPT  SP8  5.1 4.9 5.8 5.9 5.7 5.2 5.0 4.6 7.4 6.2 5.1 4.6 4.7 2.7 2.3 2.4 3.2 4.5 2.7 2.3 2.1 2.8 4.4 3.9 2.2 1.0 0.9 1.1  9.2 10.2 9.1 8.3 7.0 8.8 9.5 10.6 5.7 4.7 -0.1 -3.0 0.2 0.9 -2.8 -0.4 8.6 19.3 10.6 5.4 3.6 2.4 8.5 8.3 1.2 -7.2 -10.7 -6.8  7  Table III.5: The Forest Industries: Regression Parameter Estimates and Summary Statistics for Annual Growth Rates in Relative Factor Shares. Real Factor Prices and Factor Productivities I 1  DEPENDENT  TIME  DUM1  RELATIVE FACTOR SHARES Labour (SL) -0.008 (-2.66) Capital (SK) 0.011** (0.58) Capital (SK) 0.022 -250.47 (1.94) (-6.07) Interest (SK1) 0.05 (23.90) Materials (SM) 0.015 (4.60) Energy (SF) 0.014 (1.86) Stumpage (ST) -0.04 (-7.73) Taxpart" -0.048 (-6.12) Profit (SP) -0.077 (-2.84) REAL FACTOR PRICES Labour (rw) 0.023 (8.06) Capital (rr) 0.01** (0.58) Capital (rr) 0.01 -237.24 (3.85) (-19.19) 0.0007** Materials (rpm) (0.31) Materials (rpm) 0.001** -26.60** (0.31) (-1.52) Timber (rpt) -0.009 (-1.77) Energy (rpe) 0.009* (1.09) Energy (rpe) 0.02 -219.07 (-3.29) (9.20) Tax (rpx) -0.048 (-6.12) FACTOR PRODUCTIVITIES Labour 0.031 (10.46) Capital •0.0013** (-0.41) Capital -0.009 -3.68 (-2.32) (-0.25) -0.014 Materials (-1.84)  DUM2  0.12 (6.05)  0.11 (19.15)  0.013** (1.51)  0.11 (9.19)  0.002 (0.26)  CONST  R2  RHO  19.50 (3.23) -19.25** (-0.53) -41.27 (-1.84) -96.82 (-23.61) -25.90 (-4.03) -25.13 (-1.74) 77.37 (7.77) -95.12 (6.19) 154.1 (2.87)  0.76  0.02  0.36  0.08  0.70  -0.002  0.98  -0.05  0.79  0.007  0.82  -0.06  0.83  0.09  0.87  0.08  0.52  0.11  0.93  -0.15  0.36  0.09  0.83  0.2  0.79  0.005  0.75  0.11  0.89  -0.05  0.60  0.05  0.79  0.05  0.87  0.09  0.94  0.11  0.21  0.06  0.43  -0.21  0.83  0.03  -44.79 (-8.09) -19.73** (-0.59) -21.36 (-3.88) -1.37** (-0.33) -2.86** -0.32) 17.20 (1.77) -17.23* (-1.08) 42.47 (3.29) 94.47 (6.14) -61.35 (-10.49) 2.58** (0.40) 17.6 (2.32) 27.13 ' (1.85)  132  Timber  0.0255 (4.20) 0.0044* (-1.08) -0.02 (-2.92)  Energy Energy  -87.17 -(3.37)  0.04 3.37)  't-ratiosarein parentheses; for 26 degrees one-tailed test are t,.05 = 1.706 and t,.1=1.315;  -50.51 (-4.21)  0.75  0.13  8.73* (1.08) 40.9  0.11  0.05  0.37  -0.04  2.93) of  freedom  (df),  critical  values  for  DEPENDENT refers to dependent variable in a regression equation; TIME refers to the coefficient of time (%/a), the independent variable; DUM1 DUM2  refers refers  to to  dummy variable; ( D U M 1 *YEAR) variable;  C O N S T refers to coefficient of intercept term; R is coefficient of determination which is required (see section 2.3.1); 2  to  be  interpreted  with  caution  R H O refers to autocorrelation coefficient of residuals; Asterisk (*) signifies that relevant result is significant only at the 10% or 15% level; and Double asterisk (**) signifies that relevant result is not significant even at the 15% level.  133  Table  HI.6:  Statistics  The  for  Logging  Annual  Industry:  Growth  TIME  RELATIVE (SL)  Capital  FACTOR  Shares,  Real  and  Factor  Summary Prices  R2  RHO  9.40  0.50  0.05  -33.36 (-1.77)  0.43  0.08  (-2.71) 0.018  (4.56)  (1.90) 0.05  (SK1)  Estimates  CONST  SHARES -0.0028  (SK)  Interest  Parameter  Rates in Relative Factor Factor Productivities'  DEPENDENT  Labour  Regression  -99.06  0.95  0.29  (12.78) 0.032  (-12.63) -59.82  0.92  0.09  (13.8) 0.018  (-13.2) -33.81  0.81  0.01  (2.75) -0.016  (-2.64) 34.19  0.69  -0.19  Taxpart  (-3.42) -0.044  (3.65) -86.53  0.55  -0.001  Profit  (-2.54) -0.097  (-2.54) 195.1  0.82  0.10  (-3.06) PRICES  (3.09)  0.019 (5.59) 0.004** (0.34)  -38.53 (-5.60) -8.12** (-0.35) 19.47** (2.75)  0.72  -0.0005  0.51  0.09  0.80  0.07  17.20 (1.77) -20.97* (-1.60)  0.89  -0.05  0.80  0.05  -86.43 (-2.54)  0.55  -0.001  Materials Energy  (SM)  (SF)  Stumpage  (ST)  (SP) REAL  Labour  (rw)  Capital  (rr)  Materials  FACTOR  (rpm)  -0.009 (-2.74)  Timber  (rpt)  -0.009 (-1.77)  Energy  (rpe)  0.01* (1.62) -0.044  Tax  (rpx)  Labour  (2.53) PRODUCTIVITIES 0.02  -43.72  0.77  -0.04  Capital  (6.30) -0.018  (-6.32) 34.70  0.75  0.14  Materials  (-6.30) -0.04  0.96  -0.06  (-6.66) 0.001** (0.16) -0.008  (6.31) 81.10 (6.67) 2.40 (0.18) 16.12  0.57  0.04  0.60  0.3  (-1.72)  (1.74)  FACTOR  Timber Energy  •ratios  are  one-tailed  in  test  parentheses;  are  DEPENDENT  refers  TIME  to  DUM1  refers refers  to  the  t,.05 = 1.706 to  for  dependent  coefficient  dummy  26  and of  variable;  degrees  of  freedom  (df),  critical  t,.1 = 1.315;  variable time  in  a regression  (%/a), the  equation;  independent  variable;  values  and  DUM2  refers  CONST R  2  is  to  refers  ( D U M 1 *YEAR) variable;  to  coefficient  (see  section  RHO  refers  of  of  intercept  determination  term;  which  is  required  to  be  interpreted  with  caution  2.3.1); to  Asterisk  (*)  Double  asterisk  15% level.  coefficient  autocorrelation  signifies (**)  that the signifies  coefficient relevant that  the  of  result  residuals; is significant  relevant  result  is  at the not  10% or  significant  15% leveleven  at  the  135  Table  111.7:  Statistics  The  for  Wood  Annual  Industries:  Growth  Rates  Regression in  Factor DEPENDENT  TIME  Capital  Parameter Factor  Productivities  and  1  2.01*  0.36  0.01  (SL)  -13.15  0.007  (1.20) -1.77  0.13  0.18  (-1.08)  (1.07)  (SK)  (0.77) 0.016*  (-0.27) -31.18*  0.33  0.12  (-1.21) -93.04  0.96  -0.10  (SK1)  Materials  0.048  (SM)  (SF)  Stumpage  (ST)  Taxpart (SP)  -0.35  0.39  -0.01  (-0.22) -51.42  0.85  0.17  (3.03) -0.034  (-2.99) 68.70  0.76  -0.06  (-4.71) -0.024  (4.70) -49.46  0.54  0.10  (-2.54)  (2.58) 146.1  0.33  -0.01  -0.073 (-2.67) PRICES  (2.70)  0.025 (22.19)  -49.00 (-22.21)  0.94  -0.02  -9.85** (-0.25)  0.36  0.08  8.55 (0.32)  0.71  0.1  -13.2 (1.81) 10.77** (0.32)  0.67  0.05  0.87  -0.07  101.03 (7.17)  0.93  -0.09  -0.024 (-2.22)  47.87 (2.23)  0.50  0.11  PRODUCTIVITIES 0.024  -48.52  0.96  -0.003  (-20.12) 33.27  0.86  -0.05  (rr)  0.005** (0.24)  Capital  (rr)  -0.004 (-0.31)  FACTOR  (rpm)  -312.63 (-6.24)  0.15 (6.22)  0.006 (-1.80)  Energy  (rpe)  0.005** (-0.31)  Energy  (rpe)  -0.05 (-7.14)  FACTOR Labour  -252.63 (-9.13)  0.13 (9.13)  (20.13) -0.017 (-6.22)  Capital  RHO  (2.82) 0.026  Capital  (rpx)  2  (-20.44)  REAL (rw)  Materials  R  (20.72) 0.002  Labour  Tax  Summary Prices  (0.79) 0.002**  Interest  Profit  and  Factor  SHARES -0.0007**  (1.27)  Energy  Real  CONST  FACTOR  DUM1  Estimates  Shares,  DUM2  RELATIVE Labour (SL) Labour  Relative  Materials  -0.009  (6.23) 17.80  0.74  -0.008  Timber  (-2.35) 0.026  (2.35) -51.40  0.69  0.03  (2.72) -0.031  (-2.72) 61.57  0.94  -0.06  (-3.59)  (3.61)  Energy  •ratios  are  in  parentheses;  for  26  de grees  of  freedom  (df),  critical  values  one-tailed  test  are t,.05 = 1.706  DEPENDENT  refers  TIME  to  refers  DUM1 DUM2 CONST  refers refers refers  to  the  to to to  coefficient  t,.1=1.315;  variable  of  time,  in a regression  the  only  equation;  independent  variable;  dummy variable; (DUM1*YEAR) variable; coefficient  R is coefficient of (see section 2.3.1); 2  and  dependent  of  intercept  determination  which  term; is  required  to  be  interpreted  with  caution  R H O refers to autocorrelation coefficient of residuals; Asterisk (*) signifies that relevant result is significant only at the 10% or 15% level; and Double asterisk (**) suggests that relevant result is not significant even at the 15% level.  Table  111.8:  Summary  The  Paper  Statistics  for  &  Allied  RELATIVE (SL)  Capital  (SK)  Energy  1.83**  0.52  0.17  (0.48) -23.85  0.27  0.08  0.045  (-0.98) -88.20  0.97  -0.05  (13.03) 0.0001**  , (-12.87) -3.54  0.55  0.09  (0.13) 0.017*  (1.48) -31.70  0.95  0.02  (0.91)  (-0.85) -104.12  0.86  -0.09  (6.76) 127.86*  0.55  0.12  0.013* (1.07)  (SF)  -0.05 (-6.68) -0.064*  (SP) REAL  Labour Capital  (rr)  Materials Energy Tax  FACTOR  (rw)  (rpm)  (rpe)  (rpx) FACTOR  Labour  Materials Energy  1  t-ratios  are  in  (-1.33) PRICES  (1.35)  0.022  -42.90 (-4.92) -19.91** (-0.87)  0.88  0.09  (4.88) 0.01** (0.85)  0.31  0.08  0.050* (1.53)  -10.50* (-1.55)  0.61  -0.04  0.02 (3.78)  -47.98 (3.77)  0.93  0.03  -0.05 (-6.68)  103.30 (6.71)  0.86  -0.09  PRODUCTIVITIES 0.02  Capital  parentheses;  and Factor  SHARES -0.007**  Taxpart Profit  Real  RHO  FACTOR  (SM)  Estimates  Shares,  R2  (SK1)  Materials  Parameter  CONST  (0.35)  Interest  Regression  TIME  DEPENDENT  Labour  Industries:  Annual Growth Rates in Relative Factor Prices and Factor Productivities'  -44.10  0.91  0.09  (8.26) -0.003 (-1.34) 0.004  (-8.28) 6.79  0,18  0.01  (1.35) -9.69  0.57  0.05  (2.13) -0.006 (3.35)  (-2.15) ,-13.01  0.70  -0.03  for  26  (-3.35) degrees  of  freedom  one-tailed test are t,.05 = 1.706 and t,.1 = 1.315; DEPENDENT refers to dependent variable in a regression  (df),  critical  values  for  equation;  TIME refers to the coefficient of time (%/a), the independent variable; C O N S T refers to coefficient of intercept term; R is coefficient of determination which is required to be interpreted with caution (see section 2.3.1); R H O refers to autocorrelation coefficient of residuals; Asterisk (*) signifies that relevant result is significant only at the 10% or 15% level; and Double asterisk (**) suggests that relevant result is not significant even at the 15% level. 2  Table III.9: The Forest Industries: Regression Statistics (or Annual Growth Rates in Ratios of and DEPENDENT RATIOS RLK  Factor-Factor  TIME  OF  RELATIVE  Parameter Estimates and Summary Relative Factor Shares, Factor Prices  F A C T O R SHARES -0.015* (-1.22)  1  CONST  31.666  R  2  RHO  0.36  0.05  (1.27)  RLM  -0.022  43.95  0.79  0.02  RLT  (-3.60) 0.029  (3.59) -55.11  0.80  -0.08  RLF  (5.94) -0.024  (-5.64) 48.62  0.94  0.07  (-2.70) 0.002**  (2.79) 2.99**  0.45  0.06  RKT  (-0.10) 0.04  (0.07) -80.96  0.58  -0.02  RFK  (2.67) 0.007  (-2.62) 15.28  0.19  0.04  (-0.74)  (0.77) -104.0  0.90  0.27  0.62  -0.02  0.83  0.13  -63.79 (-11.19)  0.94  0.09  -87.08 (-4.68) -6.17 (-0.27)  0.91  0.11  0.56  -0.05  -62.57 (-4.58)  0.85  -0.002  -23.11 (-1.20) 55.87  0.68  0.07  0.62  0.14  RKM  RMT  0.055 (12.48)  RMF  0.003  (-12.12) -4.60  RFT  (0.56) 0.05  (-0.39) 98.87  RATIOS  OF  FACTOR  KLR  (-5.95) QUANTITIES 0.03 (11.17) 0.047 (4.91)  MLR TLR  0.003** (0.27)  FLR  0.032 (4.57) 0.014  MKR  (1.43) -0.027 (-2.80)  TKR KFR  (5.88)  -  (2.81)  -0.003** (0.71)  -6.01** (-0.71)  0.11  0.07  TMR  -0.047 (3.94)  -88.79 (-3.77)  0.69  0.30  FMR  -0.0147  -24.66 (-1.67)  0.38  -0.08  (1.96) -0.032 (3.34)  -64.04  0.53  -0.01  (-3.35)  TFR RATIOS WRR WPMR  OF  F A C T O R PRICES 0.018  -36.71  0.40  0.13  (1.74) 0.026  (-1.73) -50.92  0.96  0.18  (11.97)  (-12.0)  WPTR  0.032 (5.66)  -63.19 (-5.67)  0.97  -0.05  WPER  0.0156 (1.86)  -31.05 (-1.89)  0.66  0.09  RPMR  0.01 (0.77)  -20.21 (-0.78)  0.30  0.05  RPTR  0.018* (1.46)  -35.20* (-1.47)  0.34  0.07  PERR  0.008* (-1.22)  15.43* (1.19)  0.22  -0.05  PMPTR  0.0077 (4.87)  -15.09 (4.88)  0.94  0.14  PMPER  -0.017*  32.45* (1.31)  0.64  -0.009  (-1.32) 0.024 (2.07)  -45.90 (-2.06)  0.70  -0.01  PEPTR  't-ratios are in parentheses; for 26 degrees of freedom (df), critical one-tailed test are t,.05 = 1.706 and t,.1 = 1.315; DEPENDENT refers to dependent variable in a regression equation; TIME refers to the coefficient of time, the only independent variable;  values  for  C O N S T refers to coefficient of intercept term; R is coefficient of determination which is required to be interpreted with caution (see section 2.3.1); R H O refers to autocorrelation coefficient of residuals; Asterisk (*) signifies that relevant result is significant only at the 10% or 15% level; and Double asterisk (**)suggests that relevant result is not significant even at the 15% level; 2  RATIOS O F RELATIVE FACTOR SHARES refers to ratio other, e.g. RLK = SL/SK, RKM = SK/SM ans so on; RATIO OF FACTOR QUANTITIES refers to ratio of KLR = K/L, KTR = K/T and so on; RATIO O F F A C T O R PRICES refers to ratio of one WRR = W/R, PMPTR= PM/PT and so on.  of  one  one factor  relative  share  to  an-  factor  to  another  e.g.  price  to  another  e.g.  Table  111,10:  Statistics  for  The  Logging  Annual  Industry:  Growth  Rates  in and  DEPENDENT RATIOS RLK  Regression Ratios  RELATIVE  FACTOR  Estimates  Factor  Shares,  and  Summary  Factor  Prices  CONST  R  2  RHO  SHARES  -0.021 (-2.37)  RLM  Parameter Relative  Factor-Factor"*  TIME  OF  of  42.13 (2.46)  0.46  0.10  -0.034  68.88  0.95  0.08  RLT  (-17.23) 0.013  (17.50) -24.66  0.65  -0.10  RLF  (2.40) -0.021  (-2.25) 44.78  0.88  -0.04  (-3.52) -0.013* (-1.47)  (3.73) 24.98 (1.44)  0.48  0.13  RKM RKT  0.03  -62.56  0.59  0.0001  RFK  (2.62) -0.002**  (-2.61) 3.97  0.27  -0.09  RMF  (-0.20) 0.014  (0.26) -26.31  0.69  0.006  RFT  (2.51) 0.032  (-2.38) -64.91  0.76  0.01  -78.08 (-9.94)  0.88  0.02  -128.55 (-7.39) -42.32 (-2.24)  0.97  -0.04  0.57  -0.04  74.09 (5.07)  0.840.05  RATIOS  OF  FACTOR  KLR MLR  (3.66) QUANTITIES 0.04 (9.92) 0.065 (7.37)  TLR  0.021  FLR  (2.23) 0.037 (5.03)  (-3.71)  MKR  0.028 (6.27)  -54.85 (-6.27)  0.83  0.04  TKR  -0.019 (-3.02)  0.67  -0.04  KFR  0.01 (-1.64)  39.26 (3.03) 19.97 (1.62)  0.59  0.08  FMR  -0.03 (-4.70)  60.56 (4.71)  0.86  -0.04  24.80 (4.59)  0.69  -0.01  -41.31  0.56  0.09  (-2.09) -60.46  0.92  0.005  TFR RATIOS WRR WPMR WPTR WPER  OF  -0.013 (-4.56) FACTOR PRICES 0.02 (2.09) 0.031 (3.87)  (-3.88)  0.031  -60.46  0.92  0.005  (3.87) 0.022  (-3.88) -44.46  0.73  0.16  (2.23)  (-2.26)  RPMR  0.012 (1.84) 0.012 (2.23) 0.01 (1.47) -0.027 (2.08) 0.027 (2.08)  RPTR PERR PMPER PEPTR  -25.02 (1.85) -25.02 (-2.26) 19.40 (1.43) 53.05 (-2.07) -53.05 (-2.07)  0.41  0.12  0.41  0.16  0.40  0.04  0.86  0.01  0.86  0.01  t-ratios are in parentheses; for 26 degrees of freedom (df), critical one-tailed test are t,.05 = 1.706 and t,.1=1.315; DEPENDENT refers to dependent variable in a regression equation; TIME refers to the coefficient of time (%/a), the independent variable; 1  CONST  refers  to  coefficient  R is coefficient of (see section 2.3.1); 2  of  intercept  determination  which  values  for  term; is  required  to  be  interpreted  with  caution  R H O refers to autocorrelation coefficient of residuals; Asterisk (*) signifies that relevant result is significant only at the 10% or 15% level; and Double asterisk (**) suggests that relevant result is not significant even at the 15% level; RATIOS O F RELATIVE FACTOR SHARES refers to ratio other, e.g. RLK = SL/SK, RKM = SK/SM ans so on; RATIO O F FACTOR QUANTITIES refers to ratio of KLR=K/L, KTR=K/T and so on; RATIO O F FACTOR PRICES refers to ratio of one WRR = W/R, P M P T R = PM/PT and so on.  of  one  one factor  relative  share  to  an-  factor  to  another  e.g.  price  to  another  e.g.  Table  111.11:  Statistics  for  The  Wood  Annual  Industries:  Growth  Rates  in and  DEPENDENT RATIOS RLK  Regression Ratios  RELATIVE  Relative  Factor-Factor  TIME  OF  of  Parameter  FACTOR SHARES -0.016* (•(1.12))  Estimates  Factor  Shares,  and  Summary  Factor  Prices  1  CONST  R  2  RHO  33.50  0.35  0.06  0.45  -0.02  RLM  -0.013  (1.19) 1.84  RLT  (-2.53) 0.036  (1.89) -67.32  0.75  -0.03  (-4.31) 52.52 (3.64)  0.96  0.03  RKM  (4.53) -0.025 (-3.46) 0.018*  -38.30  0.34  0.04  RKT  (0.99) 0.052  (-1.06) -100.04  0.56  -0.04  (2.54)  (-2.50) 30.38  0.35  0.0009  (2.53) -68.89  0.78  -0.04  (-4.62) -110.22  0.82  0.02  0.88  0.04  RLF  RKF  -0.015 (-2.47) 0.037  RMT  (4.90) RFT  0.056 (5.20) -0.0227  RMF RATIOS  OF  FACTOR  KLR  (-3.22) QUANTITIES  (-5.16) 47.95 (3.46)  0.042 (18.20)  -81.99 (18.21)  0.98  0.01  0.035 (10.96) -0.001** (-0.16)  -68.35 (-10.97)  0.96  0.02  3.17** (0.16)  0.57  0.004  FLR  0.058 (8.04)  0.97  -0.07  MKR  -0.007 (-2.07)  -114.66 (-8.06) 14.97 (2.07)  0.50  -0.01  87.43 (4.77) -33.17  0.76  -0.04  0.84  0.03  73.19 (4.91)  0.78  -0.04  -48.12 (-7.07)  0.85  0.03  -121.46  0.84  -0.01  -54.40 (-2.27)  0.47  0.11  -62.39  0.99  0.03  MLR TLR  TKR  -0.044  KFR  (-4.76) 0.017  TMR  (1.85) -0.037  FMR  (-4.90) 0.024 (7.04)  TFR  0.062 (7.74) RATIOS  WRR WPMR  OF  F A C T O R PRICES 0.028 (2.28) 0.031 (8.81)  (-1.86)  (-7.76)  (-8.83)  143  WPTR  0.031 (8.81)  WPER  0.033 (1.98)  -62.39 (-8.83) -65.84  0.99  0.03  0.96  -0.17  (-2.00)  RPMR  0.009** (0.62)  -18.56** (-0.63)  0.27  0.03  RPTR  0.009** (0.62)  -18.56** (-0.63)  0.27  0.03  PERR  0.01 (1.14)  -21.83 (-1.17)  0.17  0.008  PMPER  0.003** (0.22)  -6.25** (-0.23)  0.86  0.21  PEPTR  -0.003** (-0.22)  6.25** (0.23)  0.86  0.21  ' t-ratios  are  in  parentheses;  for  26  degrees  of  freedom  (df),  critical  values  for  one-tailed test are t,.05 = 1.706 and t,.1 = 1.315; DEPENDENT refers to dependent variable in a regression equation; TIME refers to the coefficient of time (%/a), the independent variable; C O N S T refers to coefficient of intercept term; R is coefficient of determination which is required (see section 2.3.1); 2  to  be  interpreted  with  caution  R H O refers to autocorrelation coefficient of residuals; Asterisk (*) signifies that relevant result is significant only at the 10% or 15% level; and Double asterisk (**) suggests that relevant result is not significant even at the 15% level; RATIOS O F RELATIVE FACTOR SHARES refers to ratio of one relative other, e.g. RLK = SL/SK, RKM = SK/SM ans so on; RATIO OF FACTOR QUANTITIES refers to ratio of one factor to KLR = K/L, KTR= K/T and so on; RATIO O F F A C T O R PRICES refers to ratio of one factor price to WRR = W/R, P M P T R = PM/PT and so o n .  share  to  an-  another  e.g.  another  e.g.  144  Table  111.12:  Summary  The  Paper  Statistics  for  &  Allied  Annual Factor  OF  RELATIVE  Regression in  Ratios  Factor-Factor  Parameter of  Relative  Estimates Factor  R  RHO  2  34.72  0.33  0.01  RLM  (-1.05) -0.002*  (1.08) -4.34  0.53  0.22  RLF  (-1.31) -0.02  (-1.57) 41.22  0.94  0.14  (-2.03) 0.016* (1.02) 0.008**  (2.09) -32.99 (-1.07) 15.71  0.28  0.05  0.19  0.04  (-0.72) -0.019  (0.73) 40.75  0.94  0.01  RMF RATIOS  OF  (-2.38) QUANTITIES  FACTOR  KLR  (2.51)  0.025 (11.31)  -49.51 (-11.34)  0.92  -0.02  MLR  0.019 (9.37)  -37.45 (-9.37)  0.94  0.06  FLR  0.016 (6.24)  -31.18 (-6.25)  0.86  0.02  MKR  -0.006 (-1.94)  12.16 (1.95)  0.33  0.08  KFR  -0.009 (-3.69) -0.004  19.10 (3.69)  0.52  -0.005  7.30 (2.12)  0.40  0.03  FMR RATIOS WRR  OF  (-2.15) FACTOR PRICES 0.013 (1.16) 0.018  WPMR  -24.79  0.32  0.11  (-1.16) -36.88 (-5.71)  0.94  0.05  WPER  (5.69) 0.005**  -10.61  0.79  0.20  RPMR  (0.88) 0.009**  (-0.91) -19.17  0.27  0.04  PERR  (0.73) -0.016*  (-0.73) 30.18  0.34  0.03  (-1.31) -0.02  (1.29) 39.96  0.92  -0.09  (-2.12)  (2.10)  PMPER  t-ratios  are  one-tailed  in  test  parentheses;  are  DEPENDENT  refers  TIME  to  refers  CONST 2  (see  is  refers  section  to  the to  coefficient  for  t,.05 = 1.706  dependent  coefficient  coefficient of  2.3.1);  of  26  and  degrees  time  freedom  in a regression  (%/a), the  intercept  determination  of  (df),  critical  values  for  t,.1 = 1.315;  variable  of  and  Shares,  1  CONST  F A C T O R SHARES -0.017*  RFK  R  and  TIME  RKM  1  Rates  Prices  DEPENDENT RATIOS RLK  industries:  Growth  which  equation;  independent  variable;  term; is  required  to  be  interpreted  with  caution  RHO  refers  Asterisk  (*)  Ievel;and the  to  autocorrelation  signifies  Double  that  asterisk  coefficient  relevant (**)  of  result  suggests  residuals; is  significant  that  relevant  only  result  at  is  the  not  10%  significant  or  15%  even  at  15% level;  RATIOS  OF  other,  e.g.  RATIO  OF  KLR=K/L, RATIO  RELATIVE  FACTOR  RLK = SL/SK, FACTOR  KFR=K/F  QUANTITIES  and  OF  FACTOR  WRR=W/R,  PMPER=  SHARES  RKM = SK/SM ans so  refers  refers so  to  ratio  of  one  relative  share  to  an-  on;  to  ratio  of  one  factor  to  another  e.g.  price  to  another  e.g.  on;  PRICES  refers  PM/PE and  so  to on.  ratio  of  one  factor  I  o  Legend  CC Li_  (/)  z o  > ct: < x 00  -15 H  1955  A  SLDF  X  SKDF  •  SK1DF  B  SMDF  H  SFDF  X  SJDF_  * JA iL XD  1-960  FIGURE 111,1; Deviations  of  1965  the relative  1970 YEAR  factor  shares  1975  from  1980  their means  ©  SPDF  O  AF  1985  in the Fores! Industries.  1957-84  •o-  15  n  Legend A  SLDL  X  SKDL  •  SK1DL  BI SMDL ffi SFDL X  SJDL_  4> TAXDL_ ffi SPDL O  AL  1985  FIGURE 111,2; Deviations  of  the relative  factor  shares  from their  means  in the Logging Industry.  1957-84  4>  o  Legend  cc u. A  SLDW  X  SKDW  •  SK1DW  H  SMDW  2  SFDW  <  X  SJDW__  00  *  TAXDW  ffi  SPDW  O  AW  00  z o  > Q  -10  cc X  1955  1960  1965  1970  1975  1980  1985  YEAR  FIGURE  "1.3  :  Deviations  of  the  relative  factor  shares  from  their  means  in  the  Wood  Industries.  1957-84  oo  20-1  o cc Legend  L_ CO  o > LU  Q  LU CC < X CO  -10  -15  A  SLOP  X  SKDP  •  SK1DP  B  SMDP  E  SFDP  X  JAXDP  <t> S P D P _ ffi 1955  1960  1965  1970  1975  1980  AP  1985  YEAR  FIGURE  III.4; Deviations  in the relative  factor  shares  from  their  means  in the Paper  & Allied Industries.  1957-84  150  APPENDIX  COMPOSITION  1.  LABOUR  owners  2.  includes  and  COMPENSATION  bonus),  benefits,  and  workmen's  workers,  FACTOR  office  INPUTS  employees,  executives  and  working  parters.  LABOUR  incentive  production  OF  IV  paid  employer  includes  absence,  for  time  miscellaneous  contribution  compensation,  pay  to  direct  employee  unemployment  worked  payments  welfare  insurance,  (including  and  Canada  production  such  benefit  pension  as  taxable  plans plan  such  and  as  other  benefits.  3.  MATERIALS  refers  laid d o w n  cost,  MATERIALS  in  repairs  to  including the  supplies  proportional  component  in  in  For  total  of  cost  years:  1980 and  services  4. for  FUEL small  in  WOOD  chemicals  industry)  industries.  Pulp  the  products,  logging  and  payment  industry  and  INDUSTRY  fuel)  services handling  represent  materials  for  includes  and  column  charges only  supplies  royalties 4  and and  includes  purchased  and  of  of  maintenance  small  stumpage). part  at  duties.  operating, etc.  items  establishments  That  column  and  is,  6  in  materials  table  4  of  Cat.No.25-201.  MATERIALS wood  and  transportation  (excluding  this  materials  LOGCINC  (excluding  Stat Can.  raw  materials 1984.  Paper  Industry  this  industry.  represents  cost.  in and  the  and  other  &  the  271)  of  power  is  ALLIED  supplies  Wood  services.  Similarly, (SIC  PAPER  substantial  consumption  establishments  is laid d o w n  and  constitute  example,  and  and  INDUSTRIES  and  services.  proportion Industries,  wood  This  estimate  cost  of  more  wood than  purchased generated  of  is  50% of  fuel  and  Wood  materials  on  wood total  an  in  electricity.  by all establishments.  both  average  of  It The  used  output  about  residue, cost  wood,  (as  constitutes  based  and  include  used  of  these 66% of in  materials  of two the and  excludes  data  cost  fuel  of  151  5. STUMPAGE try  and  logging  stumpage cost. and  6.  for  In this  raw  is  firms  material  integrated firms'  'timber'  of  the  an  input price  of  price  index,  (timber)  output  is  been  logging  index  stumpage  with  with  is  for  saw  private  has  integrated  PRODUCTIVITY  material  forest  payments  harvesting  as output  TIMBER  output  firms  study,  logging  defined  represents  mills  lands. used  saw  mills  as  royalties  etc.  This  is  It  by  does  different  'forest  input'  etc.  It is  as  logging  the  logging  not  include  from  for  different  indusimplicit  delivered  the  logging  from  wood  wood industry  which  is  industry.  defined  here  of  logging  the  prepared  obtained  and  by  by  Stat.  dividing  index.  * * * + *  industry.  output/forest Stumpage  Can.  for  this  total  stumpage  input.  rate  industry. paid  by  is  Logging  an  An  implicit  index  implicit  of raw  

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