Working Paper: NBER ID: w30272
Authors: Xilu Chen; Guangyu Pei; Zheng Michael Song; Fabrizio Zilibotti
Abstract: This article documents a rapid shift toward services (tertiarization) of the Chinese economy since 2005, as evidenced by the significant increase in both employment and value-added shares of the service sector. Notably, our analysis reveals that a variety of measures of productivity growth have been greater in the service sector than in the manufacturing sector. Firm-level measures of dynamism corroborate this ongoing tertiarization trend, which is not limited to services used as inputs to industrial production but also extends to consumer services. These findings are robust across different growth accounting methodologies, including a recently proposed method by Fan et al. (2023) that addresses challenges associated with the measurement of quality improvements in service industries.
Keywords: Tertiarization; Service Sector; China; Productivity Growth; Structural Transformation
JEL Codes: O11; O14; O47; O53
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| economic growth (O49) | structural change (L16) |
| productivity growth in service sector (O49) | productivity growth in manufacturing sector (O49) |
| tertiarization process (O14) | economic growth (O49) |
| higher turnover rates in service sector (J63) | increased dynamism in service sector (O14) |
| skill upgrading in producer services (J24) | skill upgrading in other sectors (J24) |
| decline in manufacturing employment (O14) | expansion of the service sector (O14) |