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Regional convergence of output per worker in China: A neoclassical interpretation

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  • Gundlach, Erich

Abstract

Regional output per worker has converged across Chinese provinces in 1979- 1989. The estimated rate of convergence is 2.2 percent. This rate of convergence can be explained by neoclassical growth model conditional on assumptions about factor mobility and production elasticities. My empirical results show that capital mobility has been high across Chinese provinces and that the production elasticity of human capital is about twice as high as the production elasticity of physical capital. With less interprovincial capital flows as the result of an expected increase in fiscal decentralization, the rate of convergence of regional output per worker is likely to decline. --

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Paper provided by Kiel Institute for the World Economy (IfW) in its series Open Access Publications from Kiel Institute for the World Economy with number 1765.

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Date of creation: 1997
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Handle: RePEc:zbw:ifwkie:1765

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  1. N. Gregory Mankiw & David Romer & David N. Weil, 1990. "A Contribution to the Empirics of Economic Growth," NBER Working Papers 3541, National Bureau of Economic Research, Inc.
  2. N. Gregory Mankiw, 1995. "The Growth of Nations," Harvard Institute of Economic Research Working Papers 1732, Harvard - Institute of Economic Research.
  3. Friedman, Milton, 1992. "Do Old Fallacies Ever Die?," Journal of Economic Literature, American Economic Association, vol. 30(4), pages 2129-32, December.
  4. Tao Zhang & Heng-fu Zou, 2001. "Fiscal decentralization, public spending, and economic growth in China," CEMA Working Papers 58, China Economics and Management Academy, Central University of Finance and Economics.
  5. Maddison, Angus, 1987. "Growth and Slowdown in Advanced Capitalist Economies: Techniques of Quantitative Assessment," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 649-98, June.
  6. Gundlach, Erich, 1995. "The role of human capital in economic growth: new results and alternative interpretations," Kiel Working Papers 659 [rev.], Kiel Institute for the World Economy.
  7. Sinn, Stefan, 1992. "Saving-Investment Correlations and Capital Mobility: On the Evidence from Annual Data," Economic Journal, Royal Economic Society, vol. 102(414), pages 1162-70, September.
  8. Barro, R.J., 1989. "Economic Growth In A Cross Section Of Countries," RCER Working Papers 201, University of Rochester - Center for Economic Research (RCER).
  9. Martin Feldstein, 1994. "Tax Policy and International Capital Flows," NBER Working Papers 4851, National Bureau of Economic Research, Inc.
  10. Young, Alwyn, 1995. "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 641-80, August.
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Cited by:
  1. Matsuki, Takashi & Usami, Ryoichi, 2007. "China's Regional Convergence in Panels with Multiple Structural Breaks," MPRA Paper 10167, University Library of Munich, Germany, revised 17 May 2008.
  2. Smyth, Russell & Inder, Brett, 2004. "Is Chinese provincial real GDP per capita nonstationary?: Evidence from multiple trend break unit root tests," China Economic Review, Elsevier, vol. 15(1), pages 1-24.
  3. Sylvie Démurger & Jeffrey D. Sachs & Wing Thye Woo & Shuming Bao & Gene Chang & Andrew Mellinger, 2002. "Geography, Economic Policy, and Regional Development in China," Asian Economic Papers, MIT Press, vol. 1(1), pages 146-197.
  4. McErlean, Seamus & Wu, Ziping, 2003. "Regional agricultural labour productivity convergence in China," Food Policy, Elsevier, vol. 28(3), pages 237-252, June.
  5. Liu, Wen-Chi, 2013. "Reexamining the income inequality in China: Evidence from sequential panel selection method," Economic Modelling, Elsevier, vol. 31(C), pages 37-42.
  6. Shan Jordan, 2002. "A Macroeconometric Model of Income Disparity in China," International Economic Journal, Taylor & Francis Journals, vol. 16(2), pages 47-63.
  7. Wei, Kailei & Yao, Shujie & Liu, Aying, 2008. "Foreign Direct Investment and Regional Inequality in China," Working Paper Series RP2008/94, World Institute for Development Economic Research (UNU-WIDER).
  8. Sakamoto, Hiroshi & Islam, Nazrul, 2008. "Convergence across Chinese provinces: An analysis using Markov transition matrix," China Economic Review, Elsevier, vol. 19(1), pages 66-79, March.
  9. Pei-Chien Lin & Chun-Hung Lin & I-Ling Ho, 2013. "Regional convergence or divergence in China? Evidence from unit root tests with breaks," The Annals of Regional Science, Springer, vol. 50(1), pages 223-243, February.
  10. T. Gries & M. Redlin, 2011. "International integration and the determinants of regional development in China," Economic Change and Restructuring, Springer, vol. 44(1), pages 149-177, April.
  11. Steven Yamarik, 2011. "Human capital and state-level economic growth: what is the contribution of schooling?," The Annals of Regional Science, Springer, vol. 47(1), pages 195-211, August.
  12. Qinghua Zhang & Heng-fu Zou, 2011. "Regional Inequality in Contemporary China," CEMA Working Papers 518, China Economics and Management Academy, Central University of Finance and Economics.
  13. Yanqing Jiang, 2012. "An empirical study of openness and convergence in labor productivity in the Chinese provinces," Economic Change and Restructuring, Springer, vol. 45(4), pages 317-336, November.

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