Data and Code for "Exploiting or Augmenting Labor?'

We show that existing ‘production approaches’ to markdown estimation do not separately identify factor price markdowns from factor-augmenting productivity levels. We propose a method to overcome this challenge and apply it to study the effects of ownership liberalization in Chinese nonferrous metal industries. We find that private firms have much higher labor-augmenting productivity levels than state-owned enterprises (SOEs). However, we also find that private firms exert higher monopsony power over their workers than SOEs, although this only holds for domestically-owned firms. This suggests that privatization policies imply a trade-off between increased productivity and monopsony power.