Factor prices and labour productivity in the canadian manufacturing industries
For all the manufacturing industries the assumption of homotheticity is rejected. This implies that factor proportions are affected by the level of output, independent of factor prices.
For majority of the industries, with the exception of capital, all the own-price elasticities are below unity. Moreover, the energy and material price elasticities are quite small.
In general our results imply that energy is a good substitute for both capital and labour and a complement to materials. Even in the case of energy intensive manufacturing industries, only for the chemicals and chemical products industries, the substitution elasticity between energy and capital is negative and significant (complementarity).
KeywordsLabour Productivity Price Elasticity Factor Price Labour Productivity Growth Substitution Elasticity
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