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Place‐based policies, firm productivity, and displacement effects: Evidence from Shenzhen, China
Author(s) -
Koster Hans R.A.,
Cheng Fang Fang,
Gerritse Michiel,
Oort Frank G.
Publication year - 2019
Publication title -
journal of regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.171
H-Index - 79
eISSN - 1467-9787
pISSN - 0022-4146
DOI - 10.1111/jors.12415
Subject(s) - productivity , china , science park , total factor productivity , displacement (psychology) , economics , identification (biology) , economic geography , business , industrial organization , natural resource economics , economic growth , geography , psychology , botany , archaeology , psychotherapist , biology
Developing and transitional countries devote considerable funds to selected areas to stimulate local growth and firm productivity. We examine the impact of place‐based interventions due to the opening of science parks in Shenzhen, China, on firm productivity and factor use. Our identification strategy, exploiting spatial and temporal differencing in firm‐level data, addresses the issues that (a) the selection of science park locations is not random and (b) high‐productivity firms sort themselves into science parks. Firm productivity is approximately 15–25% higher due to the science park policy. The policy also increases local wages and leads to distortions due to job displacement.