A stochastic frontier analysis of technical progress, efficiency change and productivity growth in the Pacific Northwest sawmill industry

Stochastic frontier analysis was employed to investigate technical efficiency and productivity growth in the sawmilling industry of the U.S. Pacific Northwest over the period 1968-2002. The results of our analysis indicate that productivity growth was strong over the 30-year study period, due almost exclusively to technical progress. The model developed in this analysis was used to examine the cause of employment declines in the sawmilling industry between 1988 and 1994. We found that that 62% of the decline was due to changes in output and non-labor input factors and 38% was due to technical change alone.