Trade liberalization, labor market power, and misallocation across firms: Evidence from China's WTO accession☆

• 成果类型: Article
• 署名作者: Xie, Enze; Xu, Mingzhi; Yu, Miaojie
• 署名单位: Zhejiang University; Peking University; Liaoning University of Technology
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/j.jdeveco.2024.103353
• 发表日期: 2024
• 关键词: Heterogeneous monopsony power; misallocation; trade liberalization; Markdown distribution

摘要

This paper studies the impact of trade liberalization on the heterogeneity of labor market power among manufacturing firms, which is a potential source of misallocation. The model shows that heterogeneity of labor market power distorts the allocation of the factors of production, and the variance in the natural log of the markdown serves as a sufficient statistic to infer its negative impact on overall production efficiency. Using China's accession to the World Trade Organization (WTO) as a natural experiment, the empirical results suggest that lower input tariffs decrease the variance in the natural log of the markdown, which reflects the improvement in misallocation. In contrast, reductions in output tariffs have no significant effects.