Widely differing theoretical expectations exist concerning the economic performance of labor-managed firms or producer cooperatives (PCs). While a good number of theoretical studies of these firms by economists have been undertaken, there remain considerable gaps in the empirical record. This is especially true in the case of American PCs. In general, theoretical controversies have not been tempered by enough empirical analysis. While some expect good performance from PCs, others are much less sanguine. This study compares the economic performance of a group of eight worker-owned producer co-op plants with that of eight conventional mills in the Pacific Northwest softwood plywood industry. The purpose is to test the validity of several propositions that are typically maintained in the analysis of PCs suggesting that this type of organization basically lacks the incentive to utilize labor inputs efficiently, and is therefore less productive when compared to conventionally organized producing units. Using secondary data, pooled time-series cross-section equations are estimated. Results indicate that growth in annual output per employee per year is 18 percent greater in the co-ops than in their conventional counterparts. The study provides strong evidence that the two groups of plants differ significantly in their behavior. The major conclusion that emerges is that worker-owned co-ops are a viable and productive form of economic organization that utilize labor inputs efficiently and in doing so can achieve higher worker productivity than their conventional counterparts. In a public policy context, government support of employee ownership and establishment of worker-owned co-ops is viewed as a viable policy option to plant closings.

Over the years a significant decline in employment had occurred in the Douglas-fir region’s lumber and wood products industry. High levels of unemployment can lead to undesirable economic and social effects. An understanding of the nature of unemployment can facilitate future planning as well as mitigating current problems. This study has attempted to examine the underlying causes of employment decline in the region’s softwood lumber and plywood industries, specifically over the period 1979-86. This time span is of particular importance since there was a rapid decline in employment levels after 1979. There has been much controversy over the causes of this reduction but no comprehensive empirical analysis was ever undertaken to determine its cause. Meanwhile levels of output, which also declined in the early part of this span, have again reached pre-recession levels. A cost function approach was employed as the basis of the empirical analysis. The results suggest that most of the employment decline in these industries has been caused by changes in the structure of production and by increasing labour productivity. Although there are indications of cyclical unemployment, much of the reduction in the industries' labour force seems to be attributable to greater substitution of capital and logs for labour. Simulation analyses tend to suggest that changes in factor prices would not have had any dramatic effect on employment levels. It was found that of the recent employment decline in the two industries, around one-quarter of the loss in the lumber industry and one-third in the plywood industry are caused by cyclical forces. Structural factors were assumed to be the cause of the remaining loss in levels of labour input.