1 / 33

Structural Transformation and Growth in China: 1978-2004

Loren Brandt (U. of Toronto) Chang-Tai Hsieh (Berkeley) Xiaodong Zhu (U. of Toronto) Preliminary and incomplete For seminar at CCER, Beijing University October 11, 2006. Structural Transformation and Growth in China: 1978-2004. Growth Rates of Output per Worker. Observations.

miranda-roach
Download Presentation

Structural Transformation and Growth in China: 1978-2004

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Loren Brandt (U. of Toronto) Chang-Tai Hsieh (Berkeley) Xiaodong Zhu (U. of Toronto) Preliminary and incomplete For seminar at CCER, Beijing University October 11, 2006 Structural Transformation and Growth in China: 1978-2004

  2. Growth Rates of Output per Worker

  3. Observations • Labor productivity grew faster in agriculture than in non-agriculture • Alwyn Young (2003) made similar observation and concludes: “To the degree that the reforms have improved efficiency, these gains may lie principally in agriculture”

  4. Observations • Labor productivity grew faster in agriculture than in non-agriculture • Alwyn Young (2003) made similar observation and concluded: “To the degree that the reforms have improved efficiency, these gains may lie principally in agriculture” • But, aggregate labor productivity grew faster than that in both sectors

  5. Observations • Labor productivity grew faster in agriculture than in non-agriculture • Alwyn Young (2003) made similar observation and concludes: “To the degree that the reforms have improved efficiency, these gains may lie principally in agriculture” • But, aggregate labor productivity grew faster than that in both sectors positive contribution of labor reallocation

  6. Objectives of the paper • Providing a quantitative account of structural transformation in China

  7. Objectives of the paper • Providing a quantitative account of structural transformation in China • Quantifying the contribution of structural transformation to growth

  8. Objectives of the paper • Providing a quantitative account of structural transformation in China • Quantifying the contribution of structural transformation to growth • Quantifying the impact of various labor market barriers on growth and structural transformation

  9. Data • Significant revisions of official data • We use separate deflators for each of the three sectors in calculating real GDP • Similar to Alwyn Young’s method, but we construct our own service sector deflator instead of using the service component of CPI • We construct our own series of employment in the primary sector. Official series significantly underestimate labor reallocation.

  10. Decomposing aggregate labor productivity growth:simple accounting

  11. Two driving forces of labor reallocation Productivity growth in agriculture: • Without the growth, fraction of labor force in agriculture in 2004 would be 54% instead of 32% Reduction in barriers: • Without the reduction, fraction of labor force in agriculture in 2004 would be 41% instead of 32%

  12. Counterfactual exercises

  13. Conclusions • TFP growth in agriculture the main factor for labor reallocation. However, modest contribution to overall growth (about 1%).

  14. Conclusions • TFP growth in agriculture the main factor for labor reallocation. However, modest contribution to overall growth (about 1%). • Reduction in labor market barriers another factor for labor reallocation. More important, it contributed significantly to overall growth (more than 2%) by allowing for more efficient allocation of resources---especially capital.

  15. Conclusions • TFP growth in agriculture the main factor for labor reallocation. However, modest contribution to overall growth (about 1%). • Reduction in labor market barriers another factor for labor reallocation. More important, it contributed significantly to overall growth (more than 2%) by allowing for more efficient allocation of resources---especially capital. • The single most important factor for China’s growth over the last two and half decades is the TFP growth of the non-state sector (more than 4.5%).

  16. Conclusions • TFP growth in agriculture the main factor for labor reallocation. However, modest contribution to overall growth (about 1%). • Reduction in labor market barriers another factor for labor reallocation. More important, it contributed significantly to overall growth (more than 2%) by allowing for more efficient allocation of resources---especially capital. • The single most important factor for China’s growth over the last two and half decades is the TFP growth of the non-state sector (more than 4.5%). • There are still significant barriers, which prevent more efficient allocation of capital.

More Related