Real estate boom and resource misallocation in manufacturing industries: Evidence from China

Yan Wu, Nico Heerink and Linhui Yu

China Economic Review, 2020, vol. 60, issue C

Abstract: Resource misallocations between firms have been found to have substantial impacts on the aggregate total factor of productivity. This study examines the impacts of a real estate boom on resource misallocations. We propose that real estate booms drive up demand in real estate-linked industries and that these ‘windfall’ demand spillovers reduce intra-industry competition and increase productivity inequality within industries. Using the difference-in-differences approach, we document that industries that are more linked to the real estate sector experienced increased dispersion in firm productivity in the post-boom era. Real estate booms therefore increase intra-industry resource misallocation.

Keywords: Real estate boom; Resource misallocation; Productivity dispersion; Manufacturing industries (search for similar items in EconPapers)
JEL-codes: L11 L60 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:60:y:2020:i:c:s1043951x19301610

DOI: 10.1016/j.chieco.2019.101400

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