Factor Intensity, Product Switching, and Productivity: Evidence from Chinese Exporters

Yue Ma, Heiwai Tang and Yifan Zhang

No 324, Development Working Papers from Centro Studi Luca d'Agliano, University of Milano

Abstract: This paper analyzes the causal relations between firms’ productivity, factor intensity and export participation. Using propensity score matching techniques and firm-level panel data for Chinese manufacturing firms over the 1998-2007 period, we find strong evidence of domestic firms self-selecting into export markets with higher productivity ex ante, and enhanced productivity ex post. No such pattern is observed among foreign-invested .rms. We also find that both domestic and foreign new exporters exploit China’s low labor costs and specialize in their core competence, that is, firms become less capital-intensive after exporting, relative to the matched non-exporting counterparts in the same industry. To rationalize these results that contrast with most findings in the existing literature, we develop a variant of the multi-product model of Bernard, Redding, and Schott (2010) to consider varying capital intensity across products. Using transaction-level export data, we find evidence that Chinese exporters add new products that are more labor-intensive than existing products and drop products that are less labor-intensive, supporting the model predictions. Firms with a bigger decline in capital intensity after exporting are found to have a larger increase in measured TFP.

Keywords: Exporters; Productivity; Factor Intensity; Multi-product Firms (search for similar items in EconPapers)
JEL-codes: F11 L16 O53 (search for similar items in EconPapers)
Pages: 46
Date: 2011-12-27, Revised 2011-12-27
New Economics Papers: this item is included in nep-bec, nep-eff and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Downloads: (external link)
https://www.dagliano.unimi.it/media/WP2011_324.pdf (application/pdf)

Related works:
Journal Article: Factor Intensity, product switching, and productivity: Evidence from Chinese exporters (2014)
Working Paper: Factor Intensity, Product Switching, and Productivity: Evidence from Chinese Exporters (2013)
Working Paper: Factor Intensity, Product Switching, and Productivity: Evidence from Chinese Exporters (2012)
Working Paper: Factor Intensity, Product Switching, and Productivity: Evidence from Chinese Exporters (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:csl:devewp:324

Access Statistics for this paper

More papers in Development Working Papers from Centro Studi Luca d'Agliano, University of Milano Contact information at EDIRC.
Bibliographic data for series maintained by Chiara Elli ().