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    Firm productivity differences from factor markets

    Cheng, W. and Morrow, John (2018) Firm productivity differences from factor markets. Journal of Industrial Economics 66 (1), pp. 126-171. ISSN 0022-1821.

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    Abstract

    We model firm adaptation to local factor markets in which firms care about both the price and availability of inputs. The model is estimated by combining firm and population census data, and quantifies the role of factor markets in input use, productivity and welfare. Considering China’s diverse factor markets, we find within industry interquartile labor costs vary by 30-80%, leading to 3-12% interquartile differences in TFP. In general equilibrium, homogenization of labor markets would increase real income by 1.33%. Favorably endowed regions attract more economic activity, providing new insights into within-country comparative advantage and specialization.

    Metadata

    Item Type: Article
    Additional Information: This is the peer reviewed version of the article, which has been published in final form at the link above. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
    Keyword(s) / Subject(s): General Equilibrium, Factor Endowments, Structural Estimation, Productivity
    School: School of Business, Economics & Informatics > Economics, Mathematics and Statistics
    Depositing User: Administrator
    Date Deposited: 26 Mar 2018 06:41
    Last Modified: 29 Jun 2020 16:54
    URI: https://eprints.bbk.ac.uk/id/eprint/21869

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