Abstract
In the analysis of this chapter, we decompose aggregate regional labor productivity growth in the Chinese regions into three mutually exclusive components: growth driven by structural shocks, growth driven by structural transformation, and growth driven by region-specific sectoral labor productivity increases. Our empirical results show that in the 1990s, the growth effect of structural transformation contributed to interregional labor productivity convergence across the Chinese regions while the growth effect of structural shocks worked against this convergence. We also find that both regional openness and regional human capital accumulation promote regional labor productivity growth, at least in the 1980s. Our empirical results also suggest that regional openness and regional human capital accumulation may affect regional labor productivity growth through different channels: the former is shown to promote overall regional labor productivity growth by contributing to its structural component while the latter is shown to promote overall regional labor productivity growth by contributing to the region-specific component.
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