Industrial Agglomeration and Wage Inequality in China
AbstractThis paper estimates nonlinear structural wage equations derived from NEG model with data on 327 cities in China. The estimation results show that the variation of wage level across cities in China is associated with proximity to large markets. The estimated elasticity of substitution of China is smaller than those of the other countries studied in previous research. It indicates that with the same increase of sub-regional market size, China may suffer more serious regional inequality problems. My estimation shows that although increased agglomeration can increase each city’s wage level, it may also increase the wage gap between large and small cities.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 11426.
Date of creation: May 2008
Date of revision: Oct 2008
New Economic Geography; Wage Inequality; Elasticity of Substitution;
Find related papers by JEL classification:
- O24 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-11-11 (All new papers)
- NEP-CNA-2008-11-11 (China)
- NEP-GEO-2008-11-11 (Economic Geography)
- NEP-LAB-2008-11-11 (Labour Economics)
- NEP-TRA-2008-11-11 (Transition Economics)
- NEP-URE-2008-11-11 (Urban & Real Estate Economics)
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