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This paper empirically test how the change of the proportion of the value added tax impacts on each part of China's productivity based on the one step estimation method,. The results show, the higher the proportion of the value added tax, the more conducive to the improvement of production efficiency. But it is not good for the technical efficiency and scale efficiency. We should implement value added tax subsidy for technology research and development (R&D) and focus on the adjustment effect of value added tax on the specialized division of labor.

The Effect of VAT on Total Factor Productivity in China-Based on the One-step Estimation Method