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Market Access and Individual Wages: Evidence from China

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  • Laura Hering

    (Centre d'Economie de la Sorbonne, Université Paris)

  • Sandra Poncet

    (Paris School of Economics and CEPII)

Abstract

We consider the effect of geography on wages using individual data from 56 Chinese cities. We present a simple new economic geography model that links wages to individual characteristics and market access. The latter is calculated as a transport cost weighted sum of surrounding locations' market capacity. After controlling for individual skills and local factor endowments, we find that a significant fraction of the interindividual differences in returns to labor can be explained by the geography of market access. We further find greater wage sensitivity to market access for highly skilled workers and for workers in private and, particularly, foreign-owned firms. © 2010 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • 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.
  • Handle: RePEc:tpr:restat:v:92:y:2010:i:1:p:145-159
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    References listed on IDEAS

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