Is The TFP Of Chinese Service Low?

In recent years,the service industry has replaced manufacturing and agriculture both in terms of the proportion of value added,or in terms of the proportion of employment,and has become the main force driving China's economic growth.However,according to the Baumol-Focus hypothesis,it is generally assumed that the labor productivity of service industries is relatively lower than that of manufacturing industries.Some empirical studies and statistical observations confirm the idea.At the same time,however,there are also a large number of documents that do not recognize the Baumol-Focus hypothesis.It points out that some researches have resulted in lower productivity in the service industry,both in terms of lack of statistics in the service industry and the inadequacy of the traditional TFP method to reflect actual values.After adjustment,the service sector's TFP is not lower than that of the manufacturing sector,both in the service-based segment and in the service sector as a whole.Based on the above controversy,taking the Chinese economy as a sample,this paper makes use of the micro-data of A-share listed companies from 2001 to 2016,and the OLS,FE and LP method to calculate service and manufacturing's TFP.The results show that:(1)Under different methods,the TFP of the manufacturing industry is higher than that of the service industry.And the gap between the them has a tendency to further expansion;(2)According to the "quartering" of the Singelmann service industry,there are large differences in TFP among different service industries.Among them,the producer services TFP is higher than the manufacturing sector;(3)TFP decreases from east to west in the region,and state-owned enterprises are higher than that of non-state-owned enterprises.According to the hypothesis of average labor efficiency proposed by Roy(1951)and Young(2014),combined with the fact that the proportion of employment in manufacturing industry dropped due to the increase in the proportion of employment in service industries in sample data,we use the TFP data of industries to estimate the negative effect of increasing proportion on employment of different industries to its TFP.Then we use the results to readjust the previously estimated TFP of the service industry and the manufacturing industry.Finally,we find that after considering the adjustment of the average labor efficiency effect,the TFP of service industry is actually higher than that of manufacturing.We suggest that:(1)To improve the TFP of the service sector,we should step up efforts to develop modern producer services,improve and upgrade traditional living services and social services.(2)Efforts should be made to improve average labour efficiency and focus on improving non-state economic development with lower productivity.