Publication Type
Working Paper
Version
publishedVersion
Publication Date
4-2023
Abstract
We structurally estimate the firm-level frictions across prefectures in China and quantify their aggregate and distributional implications. Based on a general equi-librium model with input and output distortions and migration, we show that the firm-level frictions are less dispersed and less correlated with productivity in richer prefectures. Counterfactual exercises show that reducing the within-prefecture mis-allocation increases the aggregate welfare, discourages migration towards large cities, and narrows the spatial inequality. Moreover, internal migration alleviates the impacts of micro-frictions on aggregate welfare and worsens their impacts on spatial inequality.
Keywords
misallocation, regional trade, economic geography, welfare gai
Discipline
Asian Studies | International Economics | Regional Economics
Research Areas
Applied Microeconomics; International Economics
First Page
1
Last Page
71
Identifier
10.2139/ssrn.3925339
Citation
1
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.