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Frontiers of Economics in China

Front. Econ. China    2006, Vol. 1 Issue (1) : 1-13
Factor Mobility and Dispersion in Marginal Products: A Case on China
Gong Liutang1, Xie Danyang2
1.Guanghua School of Management, Peking University, Beijing, 100871, PRC; 2.Department of Economics, The Hong Kong University of Science and Technology, Hong Kong, China;
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Abstract This paper examines the efficiency in resource allocation in China. We estimate production functions at the provincial level and use these functions to compute time series for marginal products of capital and labor. We found that dispersion in the marginal product of capital declined from1970 to 1984 and then became stable afterward, whereas the dispersion in the marginal product of labor declined initially but the trend has been reversed since 1993. We argue that this reversal may indicate any of the following: (1) policy-driven labor migration adding to labor market inefficiency; (2) the presence of increasing returns in labor; and (3) both capital and labor having become mobile since 1993.
Issue Date: 05 March 2006
 Cite this article:   
Xie Danyang,Gong Liutang. Factor Mobility and Dispersion in Marginal Products: A Case on China[J]. Front. Econ. China, 2006, 1(1): 1-13.
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