Economies Of Plant and Firm Size in the Unites States Pulp and Paper Industries


  • Joseph Buongiorno
  • Jeffrey C. Stier
  • James K. Gilless


Labor productivity, profitability, wages, survivor analysis


Statistics from the United States Bureau of the Census, census of manufacturers of 1972 for the pulp and paper industries, were analyzed with respect to labor productivity and profitability for evidence of economies of scale. In the pulp industry, profitability and productivity appeared to decrease sharply for mills with more than 500 employees. For paper and paperboard, productivity and profitability tended to level off or decline only slightly in mills with more than 500 employees. Only in the small building paper and paperboard industry did the largest mills exhibit the highest productivity. Integrated paper mills appeared more profitable than nonintegrated mills, but even the former revealed a limit to productivity gains resulting from increases in size. Employees in large mills received significantly higher wages and worked fewer overtime hours. Survivor data for pulp mills indicated a strong increase in the relative frequency of plants with 250 to 500 employees, and a large decrease in plants with 100 to 250 employees. For paper mills, a small increase in the relative number of plants with more than 250 employees was apparent. Survivor data for other industries were inconclusive. For the three largest industries, there was no evidence of economies of scale at the firm level offsetting the stagnation or decline of productivity in large plants. Size of plants appeared to explain most of the variation in productivity among firms.


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