Development and Sources of Labor Productivityin Chinese Provinces

As China exhibited unprecedented rapid economic growth ever since its reform andopenness, the development and sources of labor productivity has gradually come to theforefront. This paper studies the development and the source of labor productivity in 31Chinese provinces during the period of 2000-2009. The labor productivity is investigatedthrough an examination at both the levels and the growth rate. Particularly, we first look at theproduction function relationship, to see the contribution of labor and other production factorsto the gross domestic product. Then, a number of possible determinants are defined. Theyare regressed on the level and the growth rate of labor productivity to shed light on theirrelationships. Controlled for unobserved time-specific and province-specific effects, the fixedeffects model with heteroskedasticity robust adjustments have been used for the estimationof three functions. Regional breakdown shows severe disparity in the economy where threemunicipal cities have the highest labor productivity among other regions. Subsequently, wesummarize the different sources and their contributions to labor productivity and provideseveral policy suggestions....