{"title":"Zombie firms, state subsidies and aggregate productivity","authors":"Xijie Gao","doi":"10.1111/ecca.12569","DOIUrl":null,"url":null,"abstract":"<p>Using firm-level data from the manufacturing sector in China, I document that zombie firms are larger and less productive, and receive higher subsidy rates on average. The difference in subsidy rates between zombies and non-zombies reflects both the selection criteria of zombies and the underlying joint distribution of subsidy rate and productivity. I develop a model with heterogeneous firms to quantify the impact of zombies on aggregate productivity. Quantitative exercises show that while both policies—reducing subsidy dispersion and facilitating zombie exits—effectively reduce the zombie rate, the former yields greater productivity gains.</p>","PeriodicalId":48040,"journal":{"name":"Economica","volume":"92 366","pages":"507-547"},"PeriodicalIF":1.6000,"publicationDate":"2025-01-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Economica","FirstCategoryId":"96","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/ecca.12569","RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
Using firm-level data from the manufacturing sector in China, I document that zombie firms are larger and less productive, and receive higher subsidy rates on average. The difference in subsidy rates between zombies and non-zombies reflects both the selection criteria of zombies and the underlying joint distribution of subsidy rate and productivity. I develop a model with heterogeneous firms to quantify the impact of zombies on aggregate productivity. Quantitative exercises show that while both policies—reducing subsidy dispersion and facilitating zombie exits—effectively reduce the zombie rate, the former yields greater productivity gains.
期刊介绍:
Economica is an international journal devoted to research in all branches of economics. Theoretical and empirical articles are welcome from all parts of the international research community. Economica is a leading economics journal, appearing high in the published citation rankings. In addition to the main papers which make up each issue, there is an extensive review section, covering a wide range of recently published titles at all levels.