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Firm heterogeneity, biased technological change, and total factor productivity: Evidence from China

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Listed:
  • Qizheng Gao

    (Wuhan University)

  • Jianqing Zhang

    (Wuhan University)

  • Guo Chen

    (Hubei University)

Abstract

Biased technological change is a crucial factor contributing to the growth of total factor productivity (TFP). In this paper, we jointly estimate the demand and production function based on the factor-augmenting CES function, calculate TFP and decomposes it into its biased and neutral components. Using data from Chinese industrial firm, we have three main findings. The cross-sector averages for price elasticity and elasticity of substitution are −8.92 and 0.37, respectively. Capital-augmenting and labor-augmenting technologies grow at a faster rate than the material-augmenting technology. The annual growth in aggregate TFP is 2.19% from 1998 to 2007, and biased technological change accounts for almost 30% of it.

Suggested Citation

  • Qizheng Gao & Jianqing Zhang & Guo Chen, 2023. "Firm heterogeneity, biased technological change, and total factor productivity: Evidence from China," Journal of Productivity Analysis, Springer, vol. 60(2), pages 147-177, October.
    • Handle: RePEc:kap:jproda:v:60:y:2023:i:2:d:10.1007_s11123-023-00683-2
    DOI: 10.1007/s11123-023-00683-2
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