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Market access and individual wages: evidence from China

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  • Laura Hering

    () (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne)

  • Sandra Poncet

    () (CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne)

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.

Suggested Citation

  • Laura Hering & Sandra Poncet, 2010. "Market access and individual wages: evidence from China," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00633785, HAL.
  • Handle: RePEc:hal:cesptp:hal-00633785
    DOI: 10.1162/rest.2009.11418
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00633785
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