Institution, Industrial Structure And Labor Productivity: A Quasi-natural Experiment From Inner Mongolia And Mongolia

Mongolia and Inner Mongolia Autonomous Region of the PRC,were a whole once,possessing similar natural and geographical environment and both lie on the Mongolia Plateau.Inner Mongolia developed rapidly as a part of the PRC by carrying out national policy since the foundation of the PRC.Mongolia,however,has developed as a nation and has its development under the influence of Russia for a long time.As a result,there is a huge gap in industrial structure and labor productivity between two regions.Since they both possess the similar factor endowments,the exploration of the influence of institution would be a sally port to study the difference of development in both regions.On the basis of reviewing the literature,we apply the institution variable into the growth model to analyze how institution affect industrial structure change.Meanwhile,we establish a model of industrial structure change to study the difference of labor productivity among three major departments.We conduct empirical study to learn how institute affect industrial structure change and analyze the shift share of labor productivity.The results of our study show that,first,industrial structure and labor productivity have little difference in Inner Mongolia and Mongolia before 1960 since they share the same origin.Second,the results of difference-in-difference method using 1960,1990 and 2008 as time breakpoints respectively,indicating that institute environment does has an influence on industrial structure change.Third,institute has a significant impact on labor productivity,from the results of shift share analysis,technological progress plays a major role in improving labor productivity when economy is in a relatively low level,however,when economy booms,institute is the main reason that labor productivity improves and the influence gets stronger as economy develops.Fourth,counterfactual experiments show that the difference of relative gross labor productivity between Inner Mongolia and Mongolia is caused by industrial structure change.