Worker Training, Firm Productivity, and Trade Liberalization: Evidence from Chinese Firms

Developing Economies, 2017, 55: 189–209

Posted: 18 May 2021

See all articles by Qing Liu

Qing Liu

Renmin University of China

Larry D. Qiu

The University of Hong Kong - Faculty of Business and Economics; Hong Kong University of Science & Technology (HKUST) - Department of Economics

Miaojie Yu

Peking University - China Center for Economic Research (CCER)

Date Written: 2017

Abstract

This paper discusses a novel mechanism — worker training — in relation to the effect of output trade liberalization on firm productivity. Using disaggregated Chinese firm‐level production data from 2004 to 2006, we find strong evidence that output trade liberalization boosts firm productivity. More importantly, after controlling for the firm's self‐selection in regards to investment in worker training, our extensive empirical research suggests the following findings. First, with fiercer import competition, firms experience a decrease in profitability and hence are less likely to invest in worker training. Second, less productive firms are more likely to train their workers, as otherwise they would collapse and exit from the market. The lower the firm productivity, the more is invested in the firm's worker training. Finally, the effect of output trade liberalization on firm productivity is more pronounced for firms with more training investment. Such results are robust regardless of various empirical specifications and different measures.

Keywords: Worker Training, Firm Productivity, Trade Liberalization

JEL Classification: F13, P51

Suggested Citation

Liu, Qing and Qiu, Larry Dongxiao and Qiu, Larry Dongxiao and Yu, Miaojie, Worker Training, Firm Productivity, and Trade Liberalization: Evidence from Chinese Firms (2017). Developing Economies, 2017, 55: 189–209, Available at SSRN: https://ssrn.com/abstract=3846149

Qing Liu (Contact Author)

Renmin University of China ( email )

Larry Dongxiao Qiu

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

Hong Kong University of Science & Technology (HKUST) - Department of Economics ( email )

School of Economics and Finance
University of Hong Kong
Pokfulam
Hong Kong

HOME PAGE: http://www.bm.ust.hk/~larryqiu/

Miaojie Yu

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

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