Title： Output Quality, Productivity Growth, and Resource Reallocation

Speaker：Shengyu Li, University of New South Wales , Sydney

Time：  10:00 – 11:30 (Beijing Time, GMT + 8) ， 14 May 2021

On Zoom

Zoom ID: 9316789264

Password：790971

About the speaker

Shengyu Li is a Senior Lecturer at University of New South Wales (UNSW), Australia. Shengyu obtained his PhD in Economics at Pennsylvania State University in 2014. Before he joined in UNSW in 2018, he was a Lecturer in Economics in University of Durham, UK. Shengyu’s research interests lie in the intersection of Industrial Organization and International Trade, with a special focus on firm heterogeneity in productivity and input prices and their implications in trade participation, resource allocation and industry dynamics. His research agenda involves estimation of firm decisions using static or dynamic structural models with micro data. Shengyu’s work has been published in International Economic Review, Journal of International Economics, Economic Journal, International Journal of Industrial Organization, and Journal of Productivity Analysis.

Abstract

Producing high quality products incurs higher costs but provides greater consumption benefits, placing a challenge in measuring firm capability when output quality differs. Using a unique panel that contains a direct measure of scientific output quality, we introduce a quality-adjusted productivity measure that accounts for demand benefits and production costs of quality. The quality-adjusted productivity displays stronger pro-cyclicality during business cycles compared with traditional productivity measures, due to the pro-cyclical quality growth and resource reallocation based on quality. Moreover, quality increases market power and causes misallocation. Removing such misallocation increases the aggregate productivity by 2.1 percent in the Chinese Steel Industry.