Research
Job market paper
Trimming the Tree to Help It Grow: Selective Exit and Productivity Growth in China’s State Sector
Abstract. Chinese state-owned enterprises achieved productivity convergence with private firms between 1998 and 2007, with 80% of this improvement driven by selective firm exits. To estimate the effects of exits on productivity, we develop a new decomposition method taking into account that exiting firms do not only have low levels of productivity, but low predicted productivity growth rates. Accounting for the differences in growth rates is key: the contribution of exit is only 12% when we use traditional methods that only take into account level differences. The decomposition analysis reveals two distinct phases in state sector productivity growth during this transformative decade. From 1998 to 2002, “grasp the large, let go of the small” reforms led to systematic elimination of underperforming firms. From 2003 to 2007, institutional reforms enabled restructuring and realigned incentives, driving genuine operational improvements among state firms. These findings suggest China’s industrial transformation followed a critical sequence — market selection eliminated underperformers (“trimming the tree”) before firms achieved productivity improvements (“growing the tree”).
Presentations: Midwest Macro Meeting (Cleveland, 2025); Women in Macro Meeting (Chicago, 2026); North American Summer Meeting of the Econometric Society (Atlanta, 2026); HHEI Conference.
Working paper
A Friction-Robust Estimator of Labor-Capital Substitution
Abstract. To be added.