Measurement of factor mismatch in industrial enterprises with labor skills heterogeneity

Shangfeng Zhang, Xiujie Li, Chaojie Zhang, Jiayu Luo, Can Cheng and Wanjun Ge

Journal of Business Research, 2023, vol. 158, issue C

Abstract: Since 1978, China’s industrial development has made great achievements, but the factor market’s development has lagged behind the commodity market’s development for a long time, leading to a factor mismatch in China’s industry, directly hindering the improvement of China’s industrial total factor productivity (TFP) and the growth of industrial output. It is of great theoretical and practical significance to study the economic efficiency loss caused by the mismatch of industrial factors for the successful transformation and sustainable development of China’s industry. In terms of economic reality, the uneven quality of China’s industrial enterprises’ labor force cannot be ignored; from the perspective of economic theoretical models, ignoring the heterogeneity of labor skills will lead to a wrong estimation of factor mismatch level. From the perspective of labor skill heterogeneity, this study constructs a factor measurement model - a multi-balanced heterogeneous manufacturer model to reveal the efficiency loss caused by the mismatch of labor factors with different skills. The empirical research finds that: first, by comparing the single equilibrium heterogeneous manufacturer model under the perspective of skill homogeneity with the multi-equilibrium heterogeneous manufacturer model under the perspective of labor skill heterogeneity, it can be seen that the former regards all labor forces as homogeneous, overestimates the degree of labor mismatch and then underestimates the potential TFP growth of China’s industrial enterprises; second, the vast majority of factor mismatches of China’s industrial enterprises come from within the industry, and the intra- and inter-industry mismatches of highly skilled labor are very serious.

Keywords: Element mismatch; Efficiency loss; Heterogeneous manufacturers; Heterogeneity of labor skills; Time-varying elastic production function (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:158:y:2023:i:c:s0148296323000012

DOI: 10.1016/j.jbusres.2023.113643

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