The impact of privatization on TFP: A quasi-experiment in China

Using the data of SOEs and Non-SOEs in industrial sector of China from 1998 to 2007, we investigate the impact of privatization on TFP. We construct a difference in difference model and use propensity score method to avoid the selection bias. We use the type of enterprises registration to identify the SOEs and define the privatization. The regress results show, privatization of SOEs can improve the efficiency of enterprises significantly. Some characteristics of firms will affect the effect of privatization. Our results are robust even if we use another classification criterion of types of firms.