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Urbanisation and Migration Externalities in China

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We evaluate the role that cities play on individual productivity in China. First, we show that location explains a large share of nominal wage disparities. Second, even after controlling for individual and firms characteristics and instrumenting city characteristics, the estimated elasticity of wage with respect to employment density is about three times larger than in Western countries. Land area and industrial specialisation also play a significant role whereas the access to external markets does not. Therefore, large agglomeration economies prevail in China and they are more localised than in Western countries. Third, we find evidence of a large positive impact of the local share of migrants on local workers' wages. Overall, these results strongly support the productivity gains that can be expected from further migration and urbanisation in China.

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Bibliographic Info

Paper provided by Aix-Marseille School of Economics, Marseille, France in its series AMSE Working Papers with number 1307.

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Length: 38 pages
Date of creation: 06 Feb 2013
Date of revision: 06 Feb 2013
Handle: RePEc:aim:wpaimx:1307

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Web page: http://www.amse-aixmarseille.fr/en
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Keywords: Urban Development; agglomeration economies; wages disparities; migration; China.;

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  1. David Card, 2005. "Is the New Immigration Really so Bad?," Economic Journal, Royal Economic Society, vol. 115(507), pages F300-F323, November.
  2. Antonio Ciccone & Robert E. Hall, 1995. "Productivity and the density of economic activity," Economics Working Papers 120, Department of Economics and Business, Universitat Pompeu Fabra.
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  8. Laura Hering & Sandra Poncet, 2010. "Market Access and Individual Wages: Evidence from China," The Review of Economics and Statistics, MIT Press, vol. 92(1), pages 145-159, February.
  9. Combes, Pierre-Philippe & Duranton, Gilles & Gobillon, Laurent, 2012. "The Costs of Agglomeration: Land Prices in French Cities," IZA Discussion Papers 7027, Institute for the Study of Labor (IZA).
  10. Laura Hering & Sandra Poncet, 2008. "The Impact of Economic Geography on Wages: Disentangling the Channels of Influence," Working Papers 2008-20, CEPII research center.
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  12. Anping Chen & Mark D. Partridge, 2013. "When are Cities Engines of Growth in China? Spread and Backwash Effects across the Urban Hierarchy," Regional Studies, Taylor & Francis Journals, vol. 47(8), pages 1313-1331, September.
  13. Topel, Robert H, 1986. "Local Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages S111-43, June.
  14. Edward L. Glaeser & David C. Mare, 1994. "Cities and Skills," NBER Working Papers 4728, National Bureau of Economic Research, Inc.
  15. Démurger, Sylvie & Gurgand, Marc & Li, Shi & Yue, Ximing, 2009. "Migrants as second-class workers in urban China? A decomposition analysis," Journal of Comparative Economics, Elsevier, vol. 37(4), pages 610-628, December.
  16. Meng, Xin & Zhang, Dandan, 2010. "Labour Market Impact of Large Scale Internal Migration on Chinese Urban 'Native' Workers," IZA Discussion Papers 5288, Institute for the Study of Labor (IZA).
  17. Enrico Moretti, 2004. "Workers' Education, Spillovers, and Productivity: Evidence from Plant-Level Production Functions," American Economic Review, American Economic Association, vol. 94(3), pages 656-690, June.
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