Working Papers
Non-neutral Technological Change in Chinese Manufacturing [Job Market Paper]
Abstract: This paper identifies firm-level factor-augmenting productivity for capital, labor, and materials using Chinese manufacturing data from 1998 to 2008, a period marked by the reform of state-owned enterprises. We develop a novel method to estimate the parameters of a CES production function and recover the three types of factor-augmenting productivity. The results reveal strong biased technological change: labor-augmenting productivity grew fastest (12% annually), followed by capital (5%), with both outperforming material-augmenting productivity (1.4%). Factor-augmenting productivity shows heterogeneity across ownership types. Dynamic Olley-Pakes decomposition indicates that productivity growth was primarily driven by incumbents, while entrants improved capital efficiency and exiters enhanced labor efficiency. Using these estimates, we explain the cost-share shifts in terms of factor-augmenting productivity gap and relative input prices.