IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/9352.html
   My bibliography  Save this paper

Urbanisation and Migration Externalities in China

Author

Listed:
  • Combes, Pierre-Philippe
  • Démurger, Sylvie
  • Li, Shi

Abstract

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.

Suggested Citation

  • Combes, Pierre-Philippe & Démurger, Sylvie & Li, Shi, 2013. "Urbanisation and Migration Externalities in China," CEPR Discussion Papers 9352, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:9352
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP9352
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Ciccone, Antonio, 2002. "Agglomeration effects in Europe," European Economic Review, Elsevier, vol. 46(2), pages 213-227, February.
    2. 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.
    3. Giordano Mion & Paolo Naticchioni, 2009. "The spatial sorting and matching of skills and firms," Canadian Journal of Economics, Canadian Economics Association, vol. 42(1), pages 28-55, February.
    4. Pierre-Philippe Combes & Gilles Duranton & Laurent Gobillon, 2019. "The Costs of Agglomeration: House and Land Prices in French Cities," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(4), pages 1556-1589.
    5. Combes, Pierre-Philippe & Duranton, Gilles & Gobillon, Laurent, 2012. "The Costs of Agglomeration: Land Prices in French Cities," IZA Discussion Papers 7027, Institute of Labor Economics (IZA).
    6. 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.
    7. 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.
    8. Zelai Xu, 2009. "Productivity and Agglomeration Economies in Chinese Cities," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 51(3), pages 284-301, September.
    9. David Card, 2005. "Is the New Immigration Really so Bad?," Economic Journal, Royal Economic Society, vol. 115(507), pages 300-323, November.
    10. George J. Borjas & Richard B. Freeman & Lawrence F. Katz, 2021. "How Much Do Immigration and Trade Affect Labor Market Outcomes?," World Scientific Book Chapters, in: Foundational Essays in Immigration Economics, chapter 8, pages 163-234, World Scientific Publishing Co. Pte. Ltd..
    11. 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).
    12. Ciccone, Antonio & Hall, Robert E, 1996. "Productivity and the Density of Economic Activity," American Economic Review, American Economic Association, vol. 86(1), pages 54-70, March.
    13. 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.
    14. Giovanni Peri, 2016. "The Effect Of Immigration On Productivity: Evidence From U.S. States," World Scientific Book Chapters, in: The Economics of International Migration, chapter 8, pages 265-275, World Scientific Publishing Co. Pte. Ltd..
    15. 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.
    16. Glaeser, Edward L & Mare, David C, 2001. "Cities and Skills," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 316-342, April.
    17. Topel, Robert H, 1986. "Local Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 111-143, June.
    18. Chun-Chung Au & J. Vernon Henderson, 2006. "Are Chinese Cities Too Small?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 73(3), pages 549-576.
    19. Combes, Pierre-Philippe & Duranton, Gilles & Gobillon, Laurent, 2008. "Spatial wage disparities: Sorting matters!," Journal of Urban Economics, Elsevier, vol. 63(2), pages 723-742, March.
    20. Meng, Xin & Zhang, Dandan, 2010. "Labour Market Impact of Large Scale Internal Migration on Chinese Urban 'Native' Workers," IZA Discussion Papers 5288, Institute of Labor Economics (IZA).
    21. Bacolod, Marigee & Blum, Bernardo S. & Strange, William C., 2009. "Skills in the city," Journal of Urban Economics, Elsevier, vol. 65(2), pages 136-153, March.
    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


    Cited by:

    1. Combes, Pierre-Philippe & Gobillon, Laurent, 2015. "The Empirics of Agglomeration Economies," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 247-348, Elsevier.
    2. Victor Iturra, 2018. "Amenity Decomposition: The Role Played by Firms and Workers in Explaining Spatial Wage Differences in Chile," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 109(4), pages 542-560, September.
    3. Beltrán Tapia, Francisco J. & Díez-Minguela, Alfonso & Martinez-Galarraga, Julio, 2018. "Tracing the Evolution of Agglomeration Economies: Spain, 1860–1991," The Journal of Economic History, Cambridge University Press, vol. 78(1), pages 81-117, March.
    4. Grace Carolina Guevara Rosero & Stephane Riou & Corinne Autant-Bernard, 2015. "Agglomeration externalities and urbanization in Ecuador," ERSA conference papers ersa15p689, European Regional Science Association.
    5. Chauvin, Juan Pablo & Glaeser, Edward & Ma, Yueran & Tobio, Kristina, 2017. "What is different about urbanization in rich and poor countries? Cities in Brazil, China, India and the United States," Journal of Urban Economics, Elsevier, vol. 98(C), pages 17-49.
    6. Grace Carolina Guevara-Rosero & Stéphane Riou & Corinne Autant-Bernard, 2019. "Agglomeration externalities in Ecuador: do urbanization and tertiarization matter?," Regional Studies, Taylor & Francis Journals, vol. 53(5), pages 706-719, May.
    7. Anthony Krakah & Gonzague Vannoorenberghe, 2023. "Spatial concentration and firm-level innovation Evidence from Ghana," LIDAM Discussion Papers IRES 2023005, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    8. Stuart Donovan & Thomas de Graaff & Henri L. F. de Groot & Carl C. Koopmans, 2024. "Unraveling urban advantages—A meta‐analysis of agglomeration economies," Journal of Economic Surveys, Wiley Blackwell, vol. 38(1), pages 168-200, February.
    9. Han, Feng & Ke, Shanzi, 2016. "The effects of factor proximity and market potential on urban manufacturing output," China Economic Review, Elsevier, vol. 39(C), pages 31-45.
    10. Hoang, Manh Cuong & Schiller, Daniel, 2023. "Which firms benefit the most from agglomeration? New evidence from an emerging country with consistent measure of productivity," Journal of Asian Economics, Elsevier, vol. 86(C).
    11. Simon Alder & Lin Shao & Fabrizio Zilibotti, 2016. "Economic reforms and industrial policy in a panel of Chinese cities," Journal of Economic Growth, Springer, vol. 21(4), pages 305-349, December.
    12. Samuel Marden, 2016. "The agricultural roots of industrial development: ‘forward linkages’ in reform era China," Working Paper Series 09116, Department of Economics, University of Sussex Business School.
    13. Samuel Marden, 2016. "The agricultural roots of industrial development: ‘forward linkages’ in reform era China," Working Paper Series 9116, Department of Economics, University of Sussex.

    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. repec:spo:wpmain:info:hdl:2441/l4oaogsnr9rvqfme8pagm9sb6 is not listed on IDEAS
    2. Combes, Pierre-Philippe & Démurger, Sylvie & Li, Shi, 2015. "Migration externalities in Chinese cities," European Economic Review, Elsevier, vol. 76(C), pages 152-167.
    3. Combes, Pierre-Philippe & Gobillon, Laurent, 2015. "The Empirics of Agglomeration Economies," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 247-348, Elsevier.
    4. Pierre-Philippe Combes & Sylvie Démurger & Shi Li, 2015. "Migration Externalities in China," SciencePo Working papers Main halshs-01137798, HAL.
    5. repec:hal:spmain:info:hdl:2441/l4oaogsnr9rvqfme8pagm9sb6 is not listed on IDEAS
    6. Jordy Meekes & Wolter H. J. Hassink, 2023. "Endogenous local labour markets, regional aggregation and agglomeration economies," Regional Studies, Taylor & Francis Journals, vol. 57(1), pages 13-25, January.
    7. Pierre-Philippe Combes & Gilles Duranton & Laurent Gobillon, 2011. "The identification of agglomeration economies," Journal of Economic Geography, Oxford University Press, vol. 11(2), pages 253-266, March.
    8. Chauvin, Juan Pablo & Glaeser, Edward & Ma, Yueran & Tobio, Kristina, 2017. "What is different about urbanization in rich and poor countries? Cities in Brazil, China, India and the United States," Journal of Urban Economics, Elsevier, vol. 98(C), pages 17-49.
    9. repec:spo:wpecon:info:hdl:2441/6n1ke9ea1o83aqc0oducs7vd1q is not listed on IDEAS
    10. repec:spo:wpmain:info:hdl:2441/6n1ke9ea1o83aqc0oducs7vd1q is not listed on IDEAS
    11. Alessia Matano & Moisés Obaco & Vicente Royuela, 2020. "What drives the spatial wage premium in formal and informal labor markets? The case of Ecuador," Journal of Regional Science, Wiley Blackwell, vol. 60(4), pages 823-847, September.
    12. Alessia Matano & Moisés Obaco & Vicente Royuela, 2018. "“What drives the spatial wage premium for formal and informal workers? The case of Ecuador”," AQR Working Papers 201806, University of Barcelona, Regional Quantitative Analysis Group, revised Jun 2018.
    13. repec:hal:spmain:info:hdl:2441/6n1ke9ea1o83aqc0oducs7vd1q is not listed on IDEAS
    14. repec:hal:wpspec:info:hdl:2441/6n1ke9ea1o83aqc0oducs7vd1q is not listed on IDEAS
    15. Duranton, Gilles & Puga, Diego, 2014. "The Growth of Cities," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 5, pages 781-853, Elsevier.
    16. Alessia Matano & Paolo Naticchioni, 2009. "Wage distribution and the spatial sorting of workers and firms," Working Papers - Dipartimento di Economia 8-DEISFOL, Dipartimento di Economia, Sapienza University of Rome, revised 2009.
    17. Diego Puga, 2017. "The changing distribution of firms and workers across cities," Development Working Papers 418, Centro Studi Luca d'Agliano, University of Milano.
    18. Cem Ozguzel, 2019. "Essays on migration and productivity [Essais sur les migrations et la productivité]," PSE-Ecole d'économie de Paris (Postprint) tel-03381203, HAL.
    19. 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.
    20. Gong, Xiaodong & Gao, Jiti & Liang, Xuan, 2019. "Inter-City Spillover and Intra-City Agglomeration Effects among Local Labour Markets in China," IZA Discussion Papers 12329, Institute of Labor Economics (IZA).
    21. Martin Andersson & Johan Klaesson & Johan P Larsson, 2014. "The sources of the urban wage premium by worker skills: Spatial sorting or agglomeration economies?," Papers in Regional Science, Wiley Blackwell, vol. 93(4), pages 727-747, November.
    22. Gabriel M. Ahlfeldt & Stephen J. Redding & Daniel M. Sturm & Nikolaus Wolf, 2015. "The Economics of Density: Evidence From the Berlin Wall," Econometrica, Econometric Society, vol. 83, pages 2127-2189, November.
    23. Lewis, Ethan & Peri, Giovanni, 2015. "Immigration and the Economy of Cities and Regions," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 625-685, Elsevier.
    24. Combes, Pierre-Philippe & Démurger, Sylvie & Li, Shi & Wang, Jianguo, 2020. "Unequal migration and urbanisation gains in China," Journal of Development Economics, Elsevier, vol. 142(C).
    25. Ahlfeldt, Gabriel M. & Pietrostefani, Elisabetta, 2019. "The economic effects of density: A synthesis," Journal of Urban Economics, Elsevier, vol. 111(C), pages 93-107.
    26. Combes, Pierre-Philippe & Duranton, Gilles & Gobillon, Laurent & Roux, Sébastien, 2012. "Sorting and local wage and skill distributions in France," Regional Science and Urban Economics, Elsevier, vol. 42(6), pages 913-930.

    More about this item

    Keywords

    Agglomeration economies; China; Migration; Urban development; Wage disparities;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

    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:cpr:ceprdp:9352. 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: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    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.