China's Manufacturing Firms' Entry-exit and Dynamic Evolution of TFP
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| Title | China's Manufacturing Firms' Entry-exit and Dynamic Evolution of TFP
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| Author | Mao Qilin and Sheng Bin |
| Organization | School of Economics,Nankai University |
| Email | nankaiguojingsuo@126.com,qilinm@126.com,shengbin@nankai.edu.cn |
| Key Words | Manufacturing Firms ；Firm Entry and Exit；TFP |
| Abstract | Using China’s manufacturing firm-level micro data from 1998 to 2007，this paper has a systematic empirical study on the characteristics of firm entry-exit and its relationship with TFP dynamic evolution. Results find that：Firm entry and exit rate in China’s manufacturing seem quite high，and they decline with firm size. The new entering firms are main composition sources of each year enterprises in the sample，but the duration of new entering firms is quite short，meanwhile the size of entering firm and exiting firm is relatively small. In the sorting of average productivity，entering firm is higher than exiting firm，but both are lower than surviving firm. At the same time，the survival probability of new entering firms do decline as the entering years grow，and the higher initial TFP of the firm，the lower rate for it to exit subsequently. The empirical results also show that：There exists significant market selection effect which forces the less efficient firms to exit，after entering into the market，new firms achieve a rapid productivity growth through learning effect，while the exiting firm faces significant “shadow of death” effect. Finally，Firm turnover has an important direct influence on manufacturing TFP growth，moreover，
it also has a significant indirect role in promoting surviving firms’ TFP growth though the market competition effect. This paper helps to properly understand the power source of China’s manufacturing TFP growth on the firm level. |
| Serial Number | WP444 |
| Time | 2013-06-24 |
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