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

Qizheng Gao (519149811@qq.com), Jianqing Zhang and Guo Chen
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Qizheng Gao: Wuhan University
Jianqing Zhang: Wuhan University
Guo Chen: Hubei University

Journal of Productivity Analysis, 2023, vol. 60, issue 2, No 4, 147-177

Abstract: 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.

Keywords: Biased Technological change; Total Factor Productivity; Chinese Industrial Firms (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s11123-023-00683-2

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