Manufacturing in a Natural Resource Based Economy: Evidence from Canadian Plants

41 Pages Posted: 2 Nov 2020

See all articles by Saeed Moshiri

Saeed Moshiri

University of Saskatchewan - Saint Thomas More College

Gry Østenstad

affiliation not provided to SSRN

Wessel Vermeulen

affiliation not provided to SSRN

Date Written: October 30, 2020

Abstract

This study investigates the effects of an oil boom on manufacturing plants performance. First, we derive several predictions using a model of heterogeneous firms. Second, we test these predictions on a plant level dataset using the Canadian Annual Survey of Manufacturers for 2000-2010. We exploit the time variation of the booming natural resource sector revenue in an oil-producing area in combination with the location of manufacturing plants to create an exogenous treatment variable. The outcome variables include plant-level wages, employment, sales, and exports. We find that initial plant-level productivity provides an important differentiation in average plants effects. Plants that are more productive become more likely to export in response to the oil boom, while less productive plants become less likely to export. Exporting firms become more likely to increase wages relative to non-exporting firms, but less likely to increase employment. While there is a great variety in the effect by sector, we do not observe that industry linkages with the resource industry drive plant performance.

Keywords: natural resources, heterogeneous firms, regional economics

JEL Classification: L6, O4, R11, R15

Suggested Citation

Moshiri, Saeed and Østenstad, Gry and Vermeulen, Wessel, Manufacturing in a Natural Resource Based Economy: Evidence from Canadian Plants (October 30, 2020). USAEE Working Paper No. 20-477, Available at SSRN: https://ssrn.com/abstract=3722253 or http://dx.doi.org/10.2139/ssrn.3722253

Saeed Moshiri (Contact Author)

University of Saskatchewan - Saint Thomas More College ( email )

1437 College Drive
Saskatoon, Saskatchewan S7N 0W
Canada

Gry Østenstad

affiliation not provided to SSRN

Wessel Vermeulen

affiliation not provided to SSRN

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
29
Abstract Views
268
PlumX Metrics