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Sources of Chinese labor productivity growth: A structural decomposition analysis, 1987-2005

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  • Yang, Ling
  • Lahr, Michael L.

Abstract

We decompose labor productivity growth from 1987 to 2005 by examining six partial factors (both supply and demand): changes in value-added coefficients, labor inputs, shares of sectoral demands that are fulfilled domestically, input mix, and the intra-sectoral shares and intersectoral mix of final demand. Our analysis confirms that simply by virtue of its size and extremely low level of labor productivity, China's farm sector continues to weigh heavily in China's overall economic advances. Labor savings have levied the largest influence on the labor productivity on all sectors across all three study subperiods. We find that this transition is highly correlated with capital deepening that accompanies China's opening up process. Still, changes in the intra-sectoral shares and the intersectoral mix of China's final demand also have become quite strong, especially in recent periods. Due to ever-increasing competitive pressures as China continues to open, changes in industries value-added coefficients have tended to counteract some of the positive benefits of labor savings for most sectors. The effects on changes in labor productivity of technology change and changes in the use of imports have been comparatively negligible and any variation in their sectoral effects have been waning over time.

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Bibliographic Info

Article provided by Elsevier in its journal China Economic Review.

Volume (Year): 21 (2010)
Issue (Month): 4 (December)
Pages: 557-570

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Handle: RePEc:eee:chieco:v:21:y:2010:i:4:p:557-570

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Web page: http://www.elsevier.com/locate/chieco

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Keywords: China Economic development Interindustry change Input-output analysis Productivity change Structural decomposition analysis;

References

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  1. Peneder, Michael, 2003. "Industrial structure and aggregate growth," Structural Change and Economic Dynamics, Elsevier, vol. 14(4), pages 427-448, December.
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  6. Jan Fagerberg, 2000. "Technological Progress, Structural Change and Productivity Growth: A Comparative Study," Working Papers 5, Centre for Technology, Innovation and Culture, University of Oslo.
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  10. Ester Gomes da Silva & Aurora A.C. Teixeira, 2006. "Surveying structural change: seminal contributions and a bibliometric account," FEP Working Papers 232, Universidade do Porto, Faculdade de Economia do Porto.
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  12. Jefferson, Gary H. & Rawski, Thomas G. & Zheng, Yuxin, 1996. "Chinese Industrial Productivity: Trends, Measurement Issues, and Recent Developments," Journal of Comparative Economics, Elsevier, vol. 23(2), pages 146-180, October.
  13. Erik Dietzenbacher & Bart Los, 1998. "Structural Decomposition Techniques: Sense and Sensitivity," Economic Systems Research, Taylor & Francis Journals, vol. 10(4), pages 307-324.
  14. Kui-Wai Li, 2003. "China's Capital and Productivity Measurement Using Financial Resources," Working Papers 851, Economic Growth Center, Yale University.
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  16. Yang, Ling & Lahr, Michael L., 2008. "Labor Productivity Differences in China 1987-1997: An Interregional Decomposition Analysis," The Review of Regional Studies, Southern Regional Science Association, vol. 38(3), pages 319-41.
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Citations

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Cited by:
  1. Zhou, Xianbo & Li, Kui-Wai & Li, Qin, 2010. "An Analysis on Technical Efficiency in Post-reform China," MPRA Paper 41034, University Library of Munich, Germany.
  2. Strohmaier, Rita & Rainer, Andreas, 2013. "On the Eonomic Purpose of General Purpose Technologies: A Combined Classical and Evolutionary Framework," MPRA Paper 45964, University Library of Munich, Germany.
  3. Yang, Ling & Thurlow, James & Lahr, Michael L., 2012. "The (Declining) Role of Households in Sustaining China's Economy: Structural Path Analysis for 1997-2007," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  4. Timo Mitze & Selin Özyurt, 2012. "The spatial dimension of trade- and FDI-driven productivity growth in Chinese provinces: A global cointegration approach," ERSA conference papers ersa12p512, European Regional Science Association.

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