Productivity, Scale and Efficiency in the U.S. Textile Industry

In this paper we employ panel data techniques to address several issues related to the recent performance of the textile industry. We build on the research and results obtained by Ramcharran (in Empirical Econ 26:515–524, 2001) for the textile industry as a whole, by extending the analysis to the sector level. Using data for 23 sectors over 39 years (1958–1996), we estimate a variable elasticity of substitution (VES) production function; the results allow us to construct time-series of marginal products of inputs and elasticities of scale and substitution. We find evidence in support of the use of a VES function and conclude that there are systematic differences among textile sectors’ productivity and performance.