Based on the industrial enterprises micro data from1998to2007, afterconstructing distortion index in capital, labor and individual enterprise and overalldistortion index, this paper analyzes factor markets’ distortion and its impact onthe total factor productivity (TFP) of enterprises, and investigates the mainsources of factors’ distortion. The results are as follows: the capital and labor’distortion indices are positive and the former is more serious than the latter.Distortion in State-owned and Collective enterprises is higher than the other’s.Distortion in capital is on the rise in the sample period, while distortion index inlabor and overall index are slight fluctuation. The extent of distortion index,actual and potential TFP are highest in the east of China. The total amount of TFPof all industrial enterprises is expected to increase by25.56%, and the eastern,central and western regions can be respectively increased by27.34%,20.65%and27.21%, if effectively eliminate the misallocation. The results of distortionsources show that, the degrees of distortion significantly deteriorate bycapital-labor ratio and enterprise scale, while other factors, such as foreign capital,export density, subsidy intensity and firms’ age, can effectively reduce thedistortion extent. |