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A dissection of the growth of regional disparities in Chinese labor productivity between 1997 and 2002

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Abstract

This paper quantifies the effects of some proximate causes for the regional productivity disparities of China in 1997 and their growth in the five years thereafter. A novel shift-share approach based on input–output data is used to divide the regional differences, so that explicit attention is paid to the regional consequences of China’s specific role in global production networks (with a focus on sectoral value added coefficients). In the process, a new method is proposed to deflate the data in constant prices. The results show that regions with high labor productivity levels in 1997 generally experienced increases of the employment shares in sectors with high productivity levels.

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Notes

  1. GDP per capita is in thousands of RMB, labor productivity in thousands of RMB per worker. Data were taken from National Bureau of Statistics (2007).

  2. See also Yang and Lahr (2008), who use an interregional input–output structural decomposition approach to analyze labor productivity growth between 1987 and 1997 for seven regions in China, distinguishing seven sectors.

  3. Wang and Szirmai (2008) also apply shift-share techniques to account for aggregate labor productivity growth in Chinese regions. Whereas their study explicitly focuses on the consequences of changing shares of state-owned and privately owned companies in employment (next to changes in sectoral employment shares and sectoral productivity growth for ownership type-sector combinations), the present study has a specific focuses on the labor productivity growth effects of changes in the parts of value chains captured by industries in each of the regions.

  4. See Jiang (2011) for the details.

  5. For example, the new figure for GDP in 2004 was 16.8 % larger than the previous estimate.

  6. The input–output tables are available for 27 regions, tables for Qinghai, Xinjiang, Tibet, and Hainan are not available. This implies that the national deflators for sectors may include small errors because they are based on the national table (i.e., implicitly giving the weighted average of all 31 regions, instead of just the 27 regions covered in our application). Given the small contribution of these four regions, the errors are expected to be very small.

  7. The major reason for this choice (and not adapt the deflated regional values added) was the fact that the sectoral prices indices may include small errors, as explained in the previous footnote.

  8. It should be borne in mind, however, that the growth percentages are not entirely comparable because of the discrepancies between the national average and the average of the regional results as discussed above.

  9. See Yang et al. (2009) for input–output analyses of nationwide differences between processing trade activities, other production activities for exporting purposes and production activities for domestic customers.

  10. Such shifts would not show up in SESratios if workers would move from a state-owned company to a privately owned company in the same sector, but since most of the jobs concerned do not require specific skills, intersectoral labor mobility is likely to have been large.

  11. Wang and Fan (2004) estimated that the labor force flows had accumulated to 28 million persons at the end of 2000. 90 % of these people left non-coastal regions (56 % from the central regions and 34 % from western regions), while 82 % of them flowed into the Eastern regions (in particular Guangdong, Fujian, Zhejiang, Shanghai, and Beijing). It should be noted, however, that the official labor force data as based on surveys have been reported to underestimate interprovincial migration largely (see, for example, Rawski 2001; Holz 2003; Young 2003).

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Authors and Affiliations

  1. Center for Forecasting Science, Academy of Mathematics and Systems Science, Chinese Academy of Sciences, Siyuan Building (Rm. C512), 55 Zhongguancun Donglu, Beijing, China

    Xuemei Jiang

  2. Faculty of Economics and Business, University of Groningen, Nettelbosje 2, 9747 AE , Groningen, The Netherlands

    Erik Dietzenbacher & Bart Los

  3. Graduate University, Chinese Academy of Sciences, Beijing, China

    Erik Dietzenbacher

Authors
  1. Xuemei Jiang
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  2. Erik Dietzenbacher
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  3. Bart Los
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Correspondence to Xuemei Jiang.

Appendix

Appendix

See Table 5.

Table 5 Sector classification
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Jiang, X., Dietzenbacher, E. & Los, B. A dissection of the growth of regional disparities in Chinese labor productivity between 1997 and 2002. Ann Reg Sci 52, 513–536 (2014). https://doi.org/10.1007/s00168-014-0597-1

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