Steel and energy substitution in US manufacturing
The authors conclude that the manufacturing sector is very capable of substituting capital and labor for steel and energy. A ballpark figure for these elasticities is from .9 between labor and steel to 2.3 between labor and energy, although more of these elasticities are greater than or equal to one. These results support the findings of previous researchers that resource inputs, taken separately, are highly substitutable for reproducible capital and labor. This study also presents evidence of substitution possibilities among natural-resource inputs. This has not been examined by researchers who aggregated resources as one input. This study finds that the own price elasticity of energy is as high as Pindyck's estimate. Thus, whether an elasticity estimate is high or low does not seem to depend solely on whether time-series or cross-section data are used. Estimates of full elasticities of substitution are computed. Capital, energy, and steel have been significantly substituted for labor. Separability tests show that the production specifications of most studies in this area are not valid and may, therefore, have biased estimates. Aggregating natural resource inputs into a single input is not a valid specification either. 16 references, 4 tables.
- Research Organization:
- Univ. of Washington, Seattle
- OSTI ID:
- 5815930
- Journal Information:
- South. Econ. J.; (United States), Journal Name: South. Econ. J.; (United States) Vol. 48:3; ISSN SECJA
- Country of Publication:
- United States
- Language:
- English
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Related Subjects
292000* -- Energy Planning & Policy-- Supply
Demand & Forecasting
32 ENERGY CONSERVATION, CONSUMPTION, AND UTILIZATION
320301 -- Energy Conservation
Consumption
& Utilization-- Industrial & Agricultural Processes-- Energy Sources
ALLOYS
CAPITAL
ECONOMETRICS
ECONOMIC ELASTICITY
ECONOMICS
ENERGY CONSUMPTION
ENERGY SUBSTITUTION
IRON ALLOYS
IRON BASE ALLOYS
LABOR
MANUFACTURING
MATERIAL SUBSTITUTION
STEELS