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Income Per Capita Inequality in China: The Role of Economic Geography and Spatial Interactions

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  • Laura Hering
  • Sandra Poncet

Abstract

(1241) Laura Hering and Sandra Poncet This paper contributes to the analysis of growing income inequality in China. We apply a structural model of economic geography to data on per capita income over 190 Chinese cities between 1995 and 2002, and evaluate the extent to which market proximity and spatial dependence can explain the growing income inequality between Chinese cities. The econometric specification explicitly incorporates spatial dependence in the form of spatially‐lagged per capita income. We show that the geography of market access and spatial dependence are significantly correlated with per capita income in China. Market access is particularly important in cities with smaller migration inflows, which is consistent with NEG theory, whereas spatially‐lagged per capita income matters more in cities with greater immigration. We conclude that the positive impact of spatially‐lagged income partly results from labour mobility between neighbours, so that spatial dependence reflects the influence of migration, knowledge transfers and increasing competition between cities.

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  • Laura Hering & Sandra Poncet, 2010. "Income Per Capita Inequality in China: The Role of Economic Geography and Spatial Interactions," The World Economy, Wiley Blackwell, vol. 33(5), pages 655-679, May.
    • Handle: RePEc:bla:worlde:v:33:y:2010:i:5:p:655-679
    DOI: 10.1111/j.1467-9701.2010.01241.x
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    Cited by:

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    2. Hering, Laura & Poncet, Sandra, 2009. "The impact of economic geography on wages: Disentangling the channels of influence," China Economic Review, Elsevier, vol. 20(1), pages 1-14, March.
    3. repec:hal:journl:dumas-00802143 is not listed on IDEAS
    4. Das, Samarjit & Ghate, Chetan & Robertson, Peter E., 2015. "Remoteness, Urbanization, and India’s Unbalanced Growth," World Development, Elsevier, vol. 66(C), pages 572-587.
    5. Roberts, Mark & Deichmann, Uwe & Fingleton, Bernard & Shi, Tuo, 2012. "Evaluating China's road to prosperity: A new economic geography approach," Regional Science and Urban Economics, Elsevier, vol. 42(4), pages 580-594.
    6. Bosker, Maarten & Brakman, Steven & Garretsen, Harry & Schramm, Marc, 2012. "Relaxing Hukou: Increased labor mobility and China’s economic geography," Journal of Urban Economics, Elsevier, vol. 72(2), pages 252-266.
    7. Herrmann-Pillath, Carsten & Libman, Alexander & Yu, Xiaofan, 2014. "Economic integration in China: Politics and culture," Journal of Comparative Economics, Elsevier, vol. 42(2), pages 470-492.
    8. Qin, Xuezheng & Hsieh, Chee-Ruey, 2014. "Economic growth and the geographic maldistribution of health care resources: Evidence from China, 1949-2010," China Economic Review, Elsevier, vol. 31(C), pages 228-246.
    9. Han, Feng & Ke, Shanzi, 2016. "The effects of factor proximity and market potential on urban manufacturing output," China Economic Review, Elsevier, vol. 39(C), pages 31-45.
    10. Haijiang Wu & Qichao Wu, 2021. "The geography of migrant workers' income in China: Evidence from a migrants dynamic survey in 2017," Growth and Change, Wiley Blackwell, vol. 52(3), pages 1826-1851, September.
    11. Roberts, Mark & Deichmann, Uwe & Fingleton, Bernard & Shi, Tuo, 2010. "On the road to prosperity ? The economic geography of China's national expressway network," Policy Research Working Paper Series 5479, The World Bank.
    12. Alfred M Wu, 2019. "The logic of basic education provision and public goods preferences in Chinese fiscal federalism," PLOS ONE, Public Library of Science, vol. 14(12), pages 1-15, December.

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