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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 - Centre National de la Recherche Scientifique)

  • Sandra Poncet

    ()

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

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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Publication status: Published in World Economy, Wiley, 2010, 33 (5), pp.655-679. <10.1111/j.1467-9701.2010.01241.x>
Handle: RePEc:hal:cesptp:hal-00633899
DOI: 10.1111/j.1467-9701.2010.01241.x
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00633899
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  1. de Sousa, José & Poncet, Sandra, 2011. "How are wages set in Beijing?," Regional Science and Urban Economics, Elsevier, vol. 41(1), pages 9-19, January.
  2. Giordano Mion, 2004. "Spatial externalities and empirical analysis: the case of Italy," LSE Research Online Documents on Economics 42663, London School of Economics and Political Science, LSE Library.
  3. 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.
  4. Meng, Xin & Gregory, Bob & Wang, Youjuan, 2005. "Poverty, Inequality, and Growth in Urban China, 1986-2000," IZA Discussion Papers 1452, Institute for the Study of Labor (IZA).
  5. Krugman, Paul & Venables, Anthony J., 1995. "Globalization and the Inequality of Nations," Working Paper Series 430, Research Institute of Industrial Economics.
  6. 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.
  7. Chun-Chung Au & Vernon Henderson, 2002. "How Migration Restrictions Limit Agglomeration and Productivity in China," NBER Working Papers 8707, National Bureau of Economic Research, Inc.
  8. 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.
  9. 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.
  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.
  11. 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.
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