Employment Decline in the Douglas-fir Region's Lumber and Plywood Industries: An Analysis of Structural and Cyclical Factors

• Main Author: Rasoolzadeh, Majid
• Format: Others
• Published: PDXScholar 1990
• Subjects: Lumber trade > Oregon > Employees > Supply and demand; Lumber trade > Washington (State) > Employees > Supply and demand; Plywood industry > Oregon > Employees > Supply and demand; Agribusiness; Urban Studies and Planning
• Online Access: https://pdxscholar.library.pdx.edu/open_access_etds/1294; https://pdxscholar.library.pdx.edu/cgi/viewcontent.cgi?article=2293&context=open_access_etds

Over the years a significant decline in employment had occurred in the Douglas-fir region’s lumber and wood products industry. High levels of unemployment can lead to undesirable economic and social effects. An understanding of the nature of unemployment can facilitate future planning as well as mitigating current problems. This study has attempted to examine the underlying causes of employment decline in the region’s softwood lumber and plywood industries, specifically over the period 1979-86. This time span is of particular importance since there was a rapid decline in employment levels after 1979. There has been much controversy over the causes of this reduction but no comprehensive empirical analysis was ever undertaken to determine its cause. Meanwhile levels of output, which also declined in the early part of this span, have again reached pre-recession levels. A cost function approach was employed as the basis of the empirical analysis. The results suggest that most of the employment decline in these industries has been caused by changes in the structure of production and by increasing labour productivity. Although there are indications of cyclical unemployment, much of the reduction in the industries' labour force seems to be attributable to greater substitution of capital and logs for labour. Simulation analyses tend to suggest that changes in factor prices would not have had any dramatic effect on employment levels. It was found that of the recent employment decline in the two industries, around one-quarter of the loss in the lumber industry and one-third in the plywood industry are caused by cyclical forces. Structural factors were assumed to be the cause of the remaining loss in levels of labour input.