Abstract:

The innovation-oriented factor’s allocation, especially the capital factor, is more distorted than the general factor. Based on production function using China's provincial panel data from 2007 to 2018 in China, the calculation results indicate there are negative distortion effects both in innovation labor and capital market. The degree of innovation labor factor market’s distortion is less than that of capital factors market. Fiscal competition, such as technological subsidies and tax competition, has played an important role in regional innovation factor market’s distortion, but the effect of tax competition is relatively small. The effect of fiscal expenditure is not statistically significant.