Productivity As If Space Mattered: An Application to Factor Markets Across China

Wenya Cheng, John Morrow and Kitjawat Tacharoen

MPRA Paper from University Library of Munich, Germany

Abstract: Although firms are dispersed across space and may face radically different production conditions, this dimension of firm heterogeneity is often overlooked. Differences between factor markets, especially for labor, are stark. To pursue this line of inquiry, we model firm hiring across local labor markets. We then use the model to estimate and quantify the role of distinct regional labor markets in firm input use, productivity and location by combining firm and population census data. Considering modern China as a country with substantial regional variation, we find labor costs vary by 30-80%, leading to 3-17% differences in TFP once nonlabor inputs are considered. Favorably endowed regions attract more value added per capita, providing new insights into within-country comparative advantage and specialization.

Keywords: General Equilibrium; Factor Endowments; Structural Estimation; Productivity. (search for similar items in EconPapers)
JEL-codes: D5 F1 J3 O1 (search for similar items in EconPapers)
Date: 2013-03
New Economics Papers: this item is included in nep-eff, nep-geo, nep-tra and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://mpra.ub.uni-muenchen.de/45743/1/MPRA_paper_45743.pdf original version (application/pdf)

Related works:
Working Paper: Productivity as if Space Mattered: An Application to Factor Markets Across China (2013)
Working Paper: Productivity As If Space Mattered: An Application to Factor Markets Across China (2013)
Working Paper: Productivity As If Space Mattered: An Application to Factor Markets Across China (2012)
Working Paper: Productivity as if space mattered: an application to factor markets across China (2012)
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