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Allocation efficiency in China : an extension of the dynamic Olley-Pakes productivity decomposition

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  • Hashiguchi, Yoshihiro

Abstract

This paper develops a quantitative measure of allocation efficiency, which is an extension of the dynamic Olley-Pakes productivity decomposition proposed by Melitz and Polanec (2015). The extended measure enables the simultaneous capture of the degree of misallocation within a group and between groups and parallel to capturing the contribution of entering and exiting firms to aggregate productivity growth. This measure empirically assesses the degree of misallocation in China using manufacturing firm-level data from 2004 to 2007. Misallocation among industrial sectors has been found to increase over time, and allocation efficiency within an industry has been found to worsen in industries that use more capital and have firms with relatively higher state-owned market shares. Allocation efficiency among three ownership sectors (state-owned, domestic private, and foreign sectors) tends to improve in industries wherein the market share moves from a less-productive state-owned sector to a more productive private sector.

Suggested Citation

  • Hashiguchi, Yoshihiro, 2015. "Allocation efficiency in China : an extension of the dynamic Olley-Pakes productivity decomposition," IDE Discussion Papers 544, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  • Handle: RePEc:jet:dpaper:dpaper544
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    References listed on IDEAS

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    1. Bin, Peng & Chen, Xiaolan & Fracasso, Andrea & Tomasi, Chiara, 2018. "Resource allocation and productivity across provinces in China," International Review of Economics & Finance, Elsevier, vol. 57(C), pages 103-113.
    2. Gabriella Berloffa & Eleonora Matteazzi & Paola Villa, 2017. "The intergenerational transmission of worklessness in Europe.The role of fathers and mothers," DEM Working Papers 2017/04, Department of Economics and Management.
    3. Marco Bee & Maria Michela Dickson & Flavio Santi, 2018. "Likelihood-based risk estimation for variance-gamma models," Statistical Methods & Applications, Springer;Società Italiana di Statistica, vol. 27(1), pages 69-89, March.
    4. Emir Malikov & Shunan Zhao & Subal C. Kumbhakar, 2020. "Estimation of firm‐level productivity in the presence of exports: Evidence from China's manufacturing," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 35(4), pages 457-480, June.
    5. Gabriella Berloffa & Eleonora Matteazzi & Alina Şandor & Paola Villa, 2019. "The quality of employment in the early labour market experience of young Europeans," Cambridge Journal of Economics, Oxford University Press, vol. 43(6), pages 1549-1575.

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    More about this item

    Keywords

    China; Productivity; Business enterprises; Economic growth; Macroeconomics; Misallocation; Firm-level productivity; Structural estimation;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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