Trade Liberalization, Firm Exits, and Productivity: Evidence from Chinese Plants

39 Pages Posted: 19 Sep 2008

See all articles by Miaojie Yu

Miaojie Yu

Peking University - China Center for Economic Research (CCER)

Date Written: September 14, 2008

Abstract

China has experienced dramatic trade liberalization in the late 1990s. In this paper, I investigate the impact of trade liberalization on firm productivity by using both Chinese manufacturing firm-level data and highly disaggregated Chinese import data over 1998-2002. For this purpose, I first calculate firm's total factor productivity (TFP) by adopting an augmented Olley-Pakes (1996) semi-parametric methodology to correct the simultaneous bias from the reverse causality and selection bias from firm's exit. After controlling for the endogeneity issue, trade liberalization is found to significantly boost firm's productivity. Moreover, the effect of trade liberalization on firm's productivity in exporting firms are found to be smaller than that in non-exporting firms.

Keywords: Trade Liberalization, Productivity, Chinese Plants

JEL Classification: F1, L1, O1, O2

Suggested Citation

Yu, Miaojie, Trade Liberalization, Firm Exits, and Productivity: Evidence from Chinese Plants (September 14, 2008). Available at SSRN: https://ssrn.com/abstract=1146786 or http://dx.doi.org/10.2139/ssrn.1146786

Miaojie Yu (Contact Author)

Peking University - China Center for Economic Research (CCER) ( email )

Beijing, Beijing 100871
China
+86-10-6275-3109 (Phone)

HOME PAGE: http://mjyu.ccer.edu.cn

Register to save articles to
your library

Register

Paper statistics

Downloads
129
Abstract Views
740
rank
225,679
PlumX Metrics