Advanced Search
MyIDEAS: Login to save this paper or follow this series

The impact of economic geography on wages: Disentangling the channels of influence

Contents:

Author Info

  • Laura Hering

    ()
    (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)

  • Sandra Poncet

    ()
    (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)

Abstract

This paper evaluates the role of economic geography in explaining regional wages in China. It investigates the extent to which market proximity can explain the evolution of wages, and through which channels. We construct a complete indicator of market access at the provincial level from data on domestic and international trade flows; this is introduced in a simultaneous-equations system to identify the direct and indirect effect of market access on wages. The estimation results for 29 Chinese provinces over 1995-2002 suggest that access to sources of demand is indeed an important factor shaping regionalwage dynamics in China. We investigate three channels through which market access might influence wages beside direct transport-cost savings: export performance, and human and physical capital accumulation. A fair share of benefits seems to come from enhanced export performance and greater accumulation of physical capital. The main source of influence of market access remains direct transport costs.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://hal.archives-ouvertes.fr/docs/00/63/38/16/PDF/Impact.pdf
Download Restriction: no

Bibliographic Info

Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number hal-00633816.

as in new window
Length:
Date of creation: 2009
Date of revision:
Publication status: Published, China Economic Review, 2009, 20, 1, 1-14
Handle: RePEc:hal:cesptp:hal-00633816

Note: View the original document on HAL open archive server: http://hal.archives-ouvertes.fr/hal-00633816
Contact details of provider:
Web page: http://hal.archives-ouvertes.fr/

Related research

Keywords: Economic geography; Wage; Trade openness; Capital accumulation; China;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, American Economic Association, vol. 89(3), pages 379-399, June.
  2. Krugman, Paul R & Venables, Anthony J, 1995. "Globalization and the Inequality of Nations," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 110(4), pages 857-80, November.
  3. Stephen Redding & Peter K. Schott, 2003. "Distance, skill deepening and development: will peripheral countries ever get rich?," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 3703, London School of Economics and Political Science, LSE Library.
  4. de Sousa, José & Poncet, Sandra, 2011. "How are wages set in Beijing?," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 41(1), pages 9-19, January.
  5. Head, Charles Keith & Mayer, Thierry, 2005. "Regional Wage and Employment Responses to Market Potential in the EU," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4908, C.E.P.R. Discussion Papers.
  6. Gordon H. Hanson, 1998. "Market Potential, Increasing Returns, and Geographic Concentration," NBER Working Papers 6429, National Bureau of Economic Research, Inc.
  7. Stephen Redding & Anthony J. Venables, 2001. "Economic Geography and International Inequality," International Trade, EconWPA 0103003, EconWPA.
  8. repec:fth:iniesr:430 is not listed on IDEAS
  9. Sebastian Edwards, 1991. "Trade Orientation, Distortions and Growth in Developing Countries," NBER Working Papers 3716, National Bureau of Economic Research, Inc.
  10. Meng, Xin & Gregory, Robert & Wang, Youjuan, 2005. "Poverty, inequality, and growth in urban China, 1986-2000," Journal of Comparative Economics, Elsevier, vol. 33(4), pages 710-729, December.
  11. Alyson C. Ma, 2006. "Geographical Location of Foreign Direct Investment and Wage Inequality in China," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 29(8), pages 1031-1055, 08.
  12. Alberto Alesina & Enrico Spolaore & Romain Wacziarg, 1997. "Economic Integration and Political Disintegration," NBER Working Papers 6163, National Bureau of Economic Research, Inc.
  13. Robert J. Barro & Xavier Sala-i-Martin, 1995. "Technological Diffusion, Convergence, and Growth," NBER Working Papers 5151, National Bureau of Economic Research, Inc.
  14. Laura Hering & Sandra Poncet, 2010. "Income per capita inequality in China: The Role of Economic Geography and Spatial Interactions," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers), HAL hal-00633899, HAL.
  15. Poncet, Sandra, 2003. "Measuring Chinese domestic and international integration," China Economic Review, Elsevier, Elsevier, vol. 14(1), pages 1-21.
  16. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 99(3), pages 483-99, June.
  17. Hélène Erkel-Rousse & Daniel Mirza, 2002. "Import price elasticities: reconsidering the evidence," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 35(2), pages 282-306, May.
  18. H Garretsen & M. Schramm & S. Brakman, 2003. "The Strategic Bombing of German Cities during World War II and its Impact for Germany," Working Papers, Utrecht School of Economics 03-08, Utrecht School of Economics.
  19. Giuseppe De Arcangelis & Giordano Mion, 2002. "Spatial Externalities and Empirical Analysis: The case of Italy," series, Dipartimento di Scienze Economiche e Metodi Matematici - Università di Bari 0006, Dipartimento di Scienze Economiche e Metodi Matematici - Università di Bari, revised Jan 2002.
  20. Beck, Thorsten & Levine, Ross & Loayza, Norman, 2000. "Finance and the sources of growth," Journal of Financial Economics, Elsevier, Elsevier, vol. 58(1-2), pages 261-300.
  21. Thierry Mayer & Keith Head, 2003. "The Empirics of Agglomeration and Trade," Working Papers, CEPII research center 2003-15, CEPII research center.
  22. Redding, Stephen & Venables, Anthony J., 2003. "South-East Asian export performance: external market access and internal supply capacity," Journal of the Japanese and International Economies, Elsevier, vol. 17(4), pages 404-431, December.
  23. Demurger, Sylvie, 2001. "Infrastructure Development and Economic Growth: An Explanation for Regional Disparities in China?," Journal of Comparative Economics, Elsevier, vol. 29(1), pages 95-117, March.
  24. Jesus Lopez-Rodriguez & J. Andres Faina, 2006. "Does distance matter for determining regional income in the European Union? An approach through the market potential concept," Applied Economics Letters, Taylor & Francis Journals, Taylor & Francis Journals, vol. 13(6), pages 385-390.
  25. James H. Stock & Motohiro Yogo, 2002. "Testing for Weak Instruments in Linear IV Regression," NBER Technical Working Papers, National Bureau of Economic Research, Inc 0284, National Bureau of Economic Research, Inc.
  26. 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.
  27. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, American Economic Association, vol. 67(3), pages 297-308, June.
  28. Douglas Staiger & James H. Stock, 1994. "Instrumental Variables Regression with Weak Instruments," NBER Technical Working Papers, National Bureau of Economic Research, Inc 0151, National Bureau of Economic Research, Inc.
  29. Sandra Poncet, 2004. "A Fragmented China," Tinbergen Institute Discussion Papers, Tinbergen Institute 04-103/2, Tinbergen Institute.
  30. De Bruyne, Karolien, 2009. "Explaining the Location of Economic Activity. Is there a Spatial Employment Structure in Belgium?," Working Papers, Hogeschool-Universiteit Brussel, Faculteit Economie en Management 2009/28, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
  31. Tavares, Jose & Wacziarg, Romain, 2001. "How democracy affects growth," European Economic Review, Elsevier, Elsevier, vol. 45(8), pages 1341-1378, August.
  32. Barry Naughton, 2007. "The Chinese Economy: Transitions and Growth," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262640643, December.
  33. Bowsher, Clive G., 2002. "On testing overidentifying restrictions in dynamic panel data models," Economics Letters, Elsevier, Elsevier, vol. 77(2), pages 211-220, October.
  34. J. Andres Faina & J. Lopez-Rodriguez, 2006. "Market access and human capital accumulation: the European Union case," Applied Economics Letters, Taylor & Francis Journals, Taylor & Francis Journals, vol. 13(9), pages 563-567.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. De Bruyne, Karolien, 2009. "Explaining the Location of Economic Activity. Is there a Spatial Employment Structure in Belgium?," Working Papers, Hogeschool-Universiteit Brussel, Faculteit Economie en Management 2009/28, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
  2. Pierre-Philippe Combes & Sylvie Démurger & Shi Li, 2013. "Urbanisation and Migration Externalities in China," AMSE Working Papers 1307, Aix-Marseille School of Economics, Marseille, France, revised 06 Feb 2013.
  3. Bai, Chong-En & Ma, Hong & Pan, Wenqing, 2012. "Spatial spillover and regional economic growth in China," China Economic Review, Elsevier, Elsevier, vol. 23(4), pages 982-990.
  4. Holger Breinlich & Gianmarco I. P. Ottaviano & Jonathan R. W. Temple, 2013. "Regional Growth and Regional Decline," CEP Discussion Papers, Centre for Economic Performance, LSE dp1232, Centre for Economic Performance, LSE.
  5. Rafael Alvarado & Miguel Atienza, 2014. "The role of market access and human capital in regional wage disparities: Empirical evidence for Ecuador," Documentos de Trabajo en Economia y Ciencia Regional, Universidad Catolica del Norte, Chile, Department of Economics 52, Universidad Catolica del Norte, Chile, Department of Economics, revised Mar 2014.
  6. Joachim Jarreau & Sandra Poncet, 2009. "Export Sophistication and Economic Performance: Evidence from Chinese Provinces," Working Papers, CEPII research center 2009-34, CEPII research center.
  7. Reinhold Kosfeld & Hans-Friedrich Eckey, 2008. "Market Access, Regional Price Level and Wage Disparities: The German Case," MAGKS Papers on Economics, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) 200814, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  8. Antoine Berthou & Lionel Fontagné, 2008. "The Euro Effects on the Firm and Product-Level Trade Margins: Evidence from France," Working Papers, CEPII research center 2008-21, CEPII research center.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:hal:cesptp:hal-00633816. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.