IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/44537.html
   My bibliography  Save this paper

Wages and Access to International Markets: Evidence from Urban China

Author

Listed:
  • He, Xiaobo

Abstract

Using China Household Income Project Survey (2002) data, this paper addresses the causal relationship between individual wages and access to international markets. The ordinary least squares estimates show statistically insignificant and quantitatively zero effects of accessibility to international markets proxied by the length of contemporary transport routes connecting the origin city and its nearest major seaport. However, using prefecture-level population density in 1820 as exogenous variation in current transport routes, the two-stage least squares regressions provide an opposite picture indicating that every 1 percent increase in distance from the origin city to international markets (i.e. the nearest seaport), ceteris paribus, has a negative impact on individual wages of 0.086 percent. This causal effect remains robust to various sensitivity tests which include current labor market structure, historical factor endowments and initial population development.

Suggested Citation

  • He, Xiaobo, 2013. "Wages and Access to International Markets: Evidence from Urban China," MPRA Paper 44537, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:44537
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/44537/1/MPRA_paper_44537.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. César Calderón & Alberto Chong, 2004. "Volume and Quality of Infrastructure and the Distribution of Income: An Empirical Investigation," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 50(1), pages 87-106, March.
    2. Kleibergen, Frank & Paap, Richard, 2006. "Generalized reduced rank tests using the singular value decomposition," Journal of Econometrics, Elsevier, vol. 133(1), pages 97-126, July.
    3. Gustafsson, Bjorn & Shi, Li, 2003. "The Ethnic Minority-Majority Income Gap in Rural China during Transition," Economic Development and Cultural Change, University of Chicago Press, vol. 51(4), pages 805-822, July.
    4. Paul Krugman & Anthony J. Venables, 1995. "Globalization and the Inequality of Nations," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(4), pages 857-880.
    5. 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.
    6. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4, National Bureau of Economic Research, Inc.
    7. Wolfgang Keller & Carol H. Shiue, 2008. "Institutions, Technology, and Trade," NBER Working Papers 13913, National Bureau of Economic Research, Inc.
    8. Liu, Zhiqiang, 2007. "The external returns to education: Evidence from Chinese cities," Journal of Urban Economics, Elsevier, vol. 61(3), pages 542-564, May.
    9. Jeremy Atack & Fred Bateman & Michael Haines & Robert A. Margo, 2009. "Did Railroads Induce or Follow Economic Growth? Urbanization and Population Growth in the American Midwest, 1850-60," NBER Working Papers 14640, National Bureau of Economic Research, Inc.
    10. Poncet, Sandra, 2003. "Measuring Chinese domestic and international integration," China Economic Review, Elsevier, vol. 14(1), pages 1-21.
    11. repec:zbw:bofitp:2009_009 is not listed on IDEAS
    12. Guy Michaels, 2008. "The Effect of Trade on the Demand for Skill: Evidence from the Interstate Highway System," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 683-701, November.
    13. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    14. Fariha Kamal & Mary E. Lovely & Puman Ouyang, 2017. "Does deeper integration enhance spatial advantages? Market access and wage growth in China," World Scientific Book Chapters, in: Mary E Lovely (ed.), International Economic Integration and Domestic Performance, chapter 14, pages 255-270, World Scientific Publishing Co. Pte. Ltd..
    15. Sandra Poncet, 2005. "A Fragmented China: Measure and Determinants of Chinese Domestic Market Disintegration," Review of International Economics, Wiley Blackwell, vol. 13(3), pages 409-430, August.
    16. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, March.
    17. Binkai Chen & Yang Yao, 2011. "The Cursed Virtue: Government Infrastructural Investment and Household Consumption in Chinese Provinces," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 73, pages 856-877, December.
    18. Kung, James Kai-sing & Li, Nan, 2011. "Commercialization as exogenous shocks: The effect of the soybean trade and migration in Manchurian villages, 1895–1934," Explorations in Economic History, Elsevier, vol. 48(4), pages 568-589.
    19. Donaldson, Dave, 2010. "Railroads of the Raj: estimating the impact of transportation infrastructure," LSE Research Online Documents on Economics 38368, London School of Economics and Political Science, LSE Library.
    20. Dave Donaldson, 2010. "Railroads of the Raj: Estimating the Impact of Transportation Infrastructure," NBER Working Papers 16487, National Bureau of Economic Research, Inc.
    21. Hongbin Li & PakWai Liu & Junsen Zhang & Ning Ma, 2007. "Economic Returns to Communist Party Membership: Evidence From Urban Chinese Twins," Economic Journal, Royal Economic Society, vol. 117(523), pages 1504-1520, October.
    22. M. Shahe Emran & Zhaoyang Hou, 2013. "Access to Markets and Rural Poverty: Evidence from Household Consumption in China," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 682-697, May.
    23. repec:hhs:iuiwop:430 is not listed on IDEAS
    24. Ying Fang & Yang Zhao, 2013. "Do Institutions Matter? Estimating the Effect of Institutions on Econo- mic Performance in China," Working Papers 2013-10-14, Wang Yanan Institute for Studies in Economics (WISE), Xiamen University.
    25. Esfahani, Hadi Salehi & Ramirez, Maria Teresa, 2003. "Institutions, infrastructure, and economic growth," Journal of Development Economics, Elsevier, vol. 70(2), pages 443-477, April.
    26. Li Shi & Ding Sai, 2013. "An Empirical Analysis of Income Inequality between a Minority and the Majority in Urban China: The Case of Ningxia Hui Autonomous Region," The Review of Black Political Economy, Springer;National Economic Association, vol. 40(3), pages 341-355, September.
    27. Jacob A. Mincer, 1974. "Schooling and Earnings," NBER Chapters, in: Schooling, Experience, and Earnings, pages 41-63, National Bureau of Economic Research, Inc.
    28. Fogel, Robert William, 1962. "A Quantitative Approach to the Study of Railroads in American Economic Growth: A Report of Some Preliminary Findings," The Journal of Economic History, Cambridge University Press, vol. 22(2), pages 163-197, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lovely, Mary E. & Liang, Yang & Zhang, Hongsheng, 2019. "Economic geography and inequality in China: Did improved market access widen spatial wage differences?," China Economic Review, Elsevier, vol. 54(C), pages 306-323.
    2. Fariha Kamal & Mary E. Lovely & Puman Ouyang, 2017. "Does deeper integration enhance spatial advantages? Market access and wage growth in China," World Scientific Book Chapters, in: Mary E Lovely (ed.), International Economic Integration and Domestic Performance, chapter 14, pages 255-270, World Scientific Publishing Co. Pte. Ltd..
    3. Hongbing Li & Hongbo Cai & Suparna Chakraborty, 2019. "Market Access, Labor Mobility, and the Wage Skill Premium: New Evidence from Chinese Cities," Open Economies Review, Springer, vol. 30(5), pages 947-973, November.
    4. Banerjee, Abhijit & Duflo, Esther & Qian, Nancy, 2020. "On the road: Access to transportation infrastructure and economic growth in China," Journal of Development Economics, Elsevier, vol. 145(C).
    5. Rosa Sanchis-Guarner, 2012. "Driving Up Wages: The Effects of Road Construction in Great Britain," SERC Discussion Papers 0120, Centre for Economic Performance, LSE.
    6. Breinlich, Holger & Ottaviano, Gianmarco I.P. & Temple, Jonathan R.W., 2014. "Regional Growth and Regional Decline," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 4, pages 683-779, Elsevier.
    7. Burhan Can Karahasan & Firat Bilgel, 2018. "Economic Geography, Growth Dynamics and Human Capital Accumulation in Turkey: Evidence from Regional and Micro Data," Working Papers 1233, Economic Research Forum, revised 10 Oct 2018.
    8. repec:esx:essedp:729 is not listed on IDEAS
    9. 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.
    10. 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.
    11. Massimiliano Calì, 2012. "Trade Liberalisation Does Not Always Raise Wage Premia: Evidence from Ugandan Districts," SERC Discussion Papers 0114, Centre for Economic Performance, LSE.
    12. Redding, Stephen J., 2016. "Goods trade, factor mobility and welfare," Journal of International Economics, Elsevier, vol. 101(C), pages 148-167.
    13. Fretz Stephan & Gorgas Christoph, 2015. "Regionaler Nutzen von Verkehrsinfrastruktur-Erweiterungen: Evidenz vom Schweizer Autobahnnetz," Perspektiven der Wirtschaftspolitik, De Gruyter, vol. 16(15), pages 57-71, March.
    14. Andrzej Cieślik & Bartłomiej Rokicki, 2016. "Individual wages and regional market potential," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 24(4), pages 661-682, October.
    15. Hornung, Erik, 2012. "Railroads and Micro-regional Growth in Prussia," CAGE Online Working Paper Series 80, Competitive Advantage in the Global Economy (CAGE).
    16. Ridhwan, Masagus M., 2021. "Spatial wage differentials and agglomeration externalities: Evidence from Indonesian microdata," Economic Analysis and Policy, Elsevier, vol. 71(C), pages 573-591.
    17. Daniel Heuermann & Benedikt Halfdanarson & Jens Suedekum, 2010. "Human Capital Externalities and the Urban Wage Premium: Two Literatures and their Interrelations," Urban Studies, Urban Studies Journal Limited, vol. 47(4), pages 749-767, April.
    18. Huang, Qiong & Chand, Satish, 2015. "Spatial spillovers of regional wages: Evidence from Chinese provinces," China Economic Review, Elsevier, vol. 32(C), pages 97-109.
    19. C. Duvivier & S. Li & M.-F. Renard, 2013. "Are workers close to cities paid higher nonagricultural wages in rural China?," Applied Economics, Taylor & Francis Journals, vol. 45(30), pages 4308-4322, October.
    20. David Roodman, 2022. "Schooling and Labor Market Consequences of School Construction in Indonesia: Comment," Papers 2207.09036, arXiv.org, revised Mar 2024.
    21. Zagler, Martin & Amighini, Alessia & Fang, Weidi, 2023. "On the evolution of the wage premium for party membership in China," Department of Economics Working Paper Series 351, WU Vienna University of Economics and Business.

    More about this item

    Keywords

    O12; O15; F16;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:44537. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.