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Urbanisation and Migration Externalities in China

Author

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  • Pierre-Philippe Combes

    () (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - EHESS - École des hautes études en sciences sociales)

  • Sylvie Démurger

    () (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)

  • Shi Li

    (School of Economics and Business Administration - School of Economics and Business Administration - Beijing Normal University)

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 inWestern 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

  • Pierre-Philippe Combes & Sylvie Démurger & Shi Li, 2013. "Urbanisation and Migration Externalities in China," Working Papers halshs-00786107, HAL.
  • Handle: RePEc:hal:wpaper:halshs-00786107
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00786107
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    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. Pierre-Philippe Combes & Gilles Duranton & Laurent Gobillon, 2012. "The Costs of Agglomeration: Land Prices in French Cities," Working Papers halshs-00793632, HAL.
    4. 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.
    5. 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.
    6. David Card, 2005. "Is the New Immigration Really so Bad?," Economic Journal, Royal Economic Society, vol. 115(507), pages 300-323, November.
    7. Combes, Pierre-Philippe & Duranton, Gilles & Gobillon, Laurent, 2012. "The Costs of Agglomeration: Land Prices in French Cities," IZA Discussion Papers 7027, Institute for the Study of Labor (IZA).
    8. Banerjee, Abhijit & Duflo, Esther & Qian, Nancy, 2012. "On the Road: Access to Transportation Infrastructure and Economic Growth in China," CEPR Discussion Papers 8874, C.E.P.R. Discussion Papers.
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    14. 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.
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    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?," Review of Economic Studies, Oxford University Press, 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.
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    Citations

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    Cited by:

    1. Combes, Pierre-Philippe & Gobillon, Laurent, 2015. "The Empirics of Agglomeration Economies," Handbook of Regional and Urban Economics, Elsevier.
    2. 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(01), pages 81-117, March.
    3. Grace Carolina Guevara Rosero & Stephane Riou & Corinne Autant-Bernard, 2015. "Agglomeration externalities and urbanization in Ecuador," ERSA conference papers ersa15p689, European Regional Science Association.
    4. 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.
    5. 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.
    6. Combes, Pierre-Philippe & Gobillon, Laurent, 2015. "The Empirics of Agglomeration Economies," Handbook of Regional and Urban Economics, Elsevier.
    7. 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.
    8. 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.

    More about this item

    Keywords

    urban development; agglomeration economies; wage disparities; migration; China;

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • 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
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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