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The Impact of Regional and Institutional Factors on Labor Productive Performance—Evidence from the Township and Village Enterprise Sector in China

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  • Zheng, Lucy
  • Batuo, Michael Enowbi
  • Shepherd, David
Abstract
This paper investigates the impact of regional and institutional factors on labor productivity in China’s Township and Village Enterprise (TVE) sector, one of the pillar industries of the economy. Employing a balanced provincial panel dataset, we find a significant variation in the factors determining regional labor productivity between the three macro-regions. The factors of capital investment intensity, foreign intensity, and export intensity behave differently with a significant regional diversity. Only human capital, the real wage, and firm size are identified as the common determinants across regions. A strong self-reinforcing effect has been found with a high degree of persistence in the behavior of, and hence slow or negligible convergence in labor productivity between regions. We find that the labor efficiency gains have been generated more from internal rather than external economies of scale across regions as well as the country as a whole. We also find that the government privatization reforms have had both a short run and increasingly long-term positive impact on the TVE labor productivity across the regions. This finding may indicate that institutional privatization can be an effective tool in promoting industrialization and labor productive performance in China as well as in other transitional economies.

Suggested Citation

  • Zheng, Lucy & Batuo, Michael Enowbi & Shepherd, David, 2017. "The Impact of Regional and Institutional Factors on Labor Productive Performance—Evidence from the Township and Village Enterprise Sector in China," World Development, Elsevier, vol. 96(C), pages 591-598.
    • Handle: RePEc:eee:wdevel:v:96:y:2017:i:c:p:591-598
    DOI: 10.1016/j.worlddev.2017.04.006
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    2. Dongshui Xie & Caiquan Bai & Huimin Wang & Qihang Xue, 2022. "The Land System and the Rise and Fall of China’s Rural Industrialization: Based on the Perspective of Institutional Change of Rural Collective Construction Land," Land, MDPI, vol. 11(7), pages 1-22, June.
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    5. Liu, C., 2018. "Reconciling Returns to Education in Off-Farm Wage Employment among Women in Rural China," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 276941, International Association of Agricultural Economists.
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    7. Shulei Cheng & Wei Fan & Jianlin Wang, 2022. "Investigating the humanitarian labor efficiency of China: a factor-specific model," Annals of Operations Research, Springer, vol. 319(1), pages 439-461, December.
    8. Hichem Saidi, 2020. "Threshold effect of institutions on finance-growth nexus in MENA region: New evidence from panel simultaneous equation model," Economics Bulletin, AccessEcon, vol. 40(1), pages 699-715.

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