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Misallocation and TFP in Rural China
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TitleMisallocation and TFP in Rural China  
AuthorZhu Xi, Shi Qinghua and Ge Qingen  
OrganizationAntai College of Economics and Management, Shanghai Jiao Tong University;;  
Key WordsTFP; resource misallocation; market distortion 
AbstractFactor markets’ distortion could induce individual household’s misallocation of capital and labor and lowers the aggregate TFP in agriculture. Based on the household’s data from rural fixed point survey in 2003-07, we analyze the extent of factors’ misallocation in east, middle, west and northeast district of china and its relationship with aggregate TFP. The results show great difference in different area. In the view of level and diffusion, the extent of resource misallocation is relatively high in the east and west of China, and low in the middle and northeast. If distortions in capital and labor could be effectively removed without consideration of technology, the total TFP could increase by more than 20%, among which the east and west district could increase by 30%. The extent of misallocation can be attributed to the nonfarm opportunities, financial market performance and the lands’ scale. Promoting social transformation is the main way to improve agriculture outputs.  
Serial NumberWP 74 
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