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Income per capita inequality in China: The Role of Economic Geography and Spatial Interactions

  • Laura Hering

    ()

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

  • Sandra Poncet

    ()

    (Axe Développement et mondialisation - CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS)

This paper contributes to the analysis of growing income disparities within China. Based on a structural model of economic geography using data on per capita income, we evaluate the extent to which market proximity and spatial dependence can explain growing income inequality between Chinese cities. We rely on a data set of 195 Chinese cities between 1995 and 2002. Our econometric specification incorporates an explicit consideration of spatial dependence effects in the form of spatially lagged per capita income. We provide evidence that the geography of access to markets is statistically significant in explaining variation in per capita income in China, especially so in provinces with low migration inflows which is coherent with NEG theory.

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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number hal-00633899.

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Date of creation: 2010
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Handle: RePEc:hal:cesptp:hal-00633899
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  1. 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.
  2. MION, Giordano, 2003. "Spatial externalities and empirical analysis: the case of Italy," CORE Discussion Papers 2003015, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Krugman, Paul & Venables, Anthony J., 1995. "Globalization and the Inequality of Nations," Working Paper Series 430, Research Institute of Industrial Economics.
  4. James H. Stock & Motohiro Yogo, 2002. "Testing for Weak Instruments in Linear IV Regression," NBER Technical Working Papers 0284, National Bureau of Economic Research, Inc.
  5. Meng, Xin & Gregory, Robert & Wang, Youjuan, 2005. "Poverty, inequality, and growth in urban China, 1986-2000," Journal of Comparative Economics, Elsevier, vol. 33(4), pages 710-729, December.
  6. José De Sousa & Sandra Poncet, 2007. "How are Wages set in Beijing?," Working Papers 2007-13, CEPII research center.
  7. Cletus C. Coughlin & Eran Segev, 1999. "Foreign direct investment in China: a spatial econometric study," Working Papers 1999-001, Federal Reserve Bank of St. Louis.
  8. Au, Chun-Chung & Henderson, J. Vernon, 2006. "How migration restrictions limit agglomeration and productivity in China," Journal of Development Economics, Elsevier, vol. 80(2), pages 350-388, August.
  9. Bernard Fingleton, 2006. "The new economic geography versus urban economics: an evaluation using local wage rates in Great Britain," Oxford Economic Papers, Oxford University Press, vol. 58(3), pages 501-530, July.
  10. Shang-Jin Wei, 1996. "Intra-National versus International Trade: How Stubborn are Nations in Global Integration?," NBER Working Papers 5531, National Bureau of Economic Research, Inc.
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