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Structural change in Finnish manufacturing: The theory of the aggregation of production functions and an empirical analysis with a plant-level panel

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  • Pekka Sauramo
  • Mika Maliranta

Abstract

In the paper, structural change in the Finnish manufacturing industries is studied by means of the theory of the aggregation of production functions and longitudinal plant-level data for the period from 1980 until 2005. The nature of structural change in twelve industries is characterised by examination of the invariance of the aggregate production functions over time. Aggregate production functions need not be estimated because, according to the theory of the aggregation of production functions, the invariance can be analysed by the investigation of the stability of the capacity density functions which describe the distribution of value added in the industries. Even though the shapes of aggregate production functions alter over time in most industries, there are differences in timing and in the degree of turbulence across industries. The analysis confirms the result obtained earlier that in some industries, for example in the paper industry, the late 1980s marked the beginning of a period of relatively strong structural change. The food industry and the manufacture of communications equipment are examples of industries in which the 1990s was a period of turbulence.

Suggested Citation

  • Pekka Sauramo & Mika Maliranta, 2010. "Structural change in Finnish manufacturing: The theory of the aggregation of production functions and an empirical analysis with a plant-level panel," Working Papers 258, Työn ja talouden tutkimus LABORE, The Labour Institute for Economic Research LABORE.
    • Handle: RePEc:pst:wpaper:258
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    technological change; structural change; aggregation theory; production function; beta regression;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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