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Inter-regional spillover and intra-regional agglomeration effects among local labour markets in China

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Listed:
  • Xiaodong Gong
  • Jiti Gao
  • Xuan Liang
  • Xin Meng

Abstract

In this paper, we study intra-city agglomeration externality and inter-city spillover effects on productivity of 185 Chinese cities at and above the prefectural level for the years between 1995 and 2009. In particular, we investigate how a shock may be amplified or weakened by these externality effects and how productivity in a city varies with and affects that of other cities in the economy. We estimate the impacts of population size on productivity in 185 Chinese cities using spatial fixed-effect panel data models. Both the endogenous and exogenous spatial dependence are allowed for. The direct and indirect effects of the factors are calculated and compared for various city groups. We find that a significant positive effect of urban population on the real wage levels, which confirms the existence of agglomeration economy within regions. We also find significant differences in both the direct and indirect effect of factors such as FDI between more and less population dense areas. This seems to suggest that agglomeration economy may also exist among regions. Disparity between regions in economic growth and productivity could be explained by the statistically significant regional variations in the direct and indirect effects.

Suggested Citation

  • Xiaodong Gong & Jiti Gao & Xuan Liang & Xin Meng, 2018. "Inter-regional spillover and intra-regional agglomeration effects among local labour markets in China," Monash Econometrics and Business Statistics Working Papers 20/18, Monash University, Department of Econometrics and Business Statistics.
    • Handle: RePEc:msh:ebswps:2018-20
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    File URL: https://www.monash.edu/business/ebs/research/publications/ebs/wp20-2018.pdf
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    References listed on IDEAS

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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • 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

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