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High-Skilled Services and Development in China

Author

Listed:
  • Berthold Herrendorf

    (Arizona State University)

  • Lei Fang

    (Federal Reserve Bank of Atlanta)

Abstract

We document that the employment share of high-skilled services is much lower in China than in countries with similar GDP per capita. We build a model of structural change between goods, low-skilled services, and high-skilled services to account for this observation. We find that large distortions limit the size of high-skilled services in China. If they were removed, both high-skilled services and GDP per capita would increase considerably and the effects of technological progress and education on GDP per capita would be considerably larger. This suggests that distortions in high-skilled services importantly hold back the development of China.

Suggested Citation

  • Berthold Herrendorf & Lei Fang, 2019. "High-Skilled Services and Development in China," 2019 Meeting Papers 454, Society for Economic Dynamics.
  • Handle: RePEc:red:sed019:454
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    File URL: https://economicdynamics.org/meetpapers/2019/paper_454.pdf
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    References listed on IDEAS

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    1. Tasso Adamopoulos & Loren Brandt & Jessica Leight & Diego Restuccia, 2017. "Misallocation, Selection and Productivity: A Quantitative Analysis with Panel Data from China," Working Papers tecipa-593, University of Toronto, Department of Economics.
    2. Timo Boppart, 2014. "Structural Change and the Kaldor Facts in a Growth Model With Relative Price Effects and Non‐Gorman Preferences," Econometrica, Econometric Society, vol. 82, pages 2167-2196, November.
    3. Marti Mestieri & Danial Lashkari & Diego Comin, 2015. "Structural Transformations with Long-Run Price and Income Effects," 2015 Meeting Papers 437, Society for Economic Dynamics.
    4. Simon Alder & Andreas Mueller & Timo Boppart, 2018. "A theory of structural change that can fit the data," 2018 Meeting Papers 988, Society for Economic Dynamics.
    5. Duernecker, Georg & Herrendorf, Berthold & Valentinyi, Akos, 2017. "Structural Change within the Service Sector and the Future of Baumol's Disease," CEPR Discussion Papers 12467, C.E.P.R. Discussion Papers.
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada

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