IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/15339.html
   My bibliography  Save this paper

Industry specialization, diversification, churning, and unemployment in Chinese cities

Author

Listed:
  • Fu, Shihe
  • Dong, Xiaofang
  • Chai, Guojun

Abstract

This paper studies how industry specialization, diversification, and churning affect unemployment rates in Chinese cities. Using a city level panel data set from 1997 to 2006, we find that the specialization of wholesale and retail industry can significantly decrease unemployment rate; however, specializing in finance industry increases unemployment rate. In contrast to the evidence from developed countries, industry diversity is positively and significantly associated with unemployment rates in Chinese cities, possibly due to the higher degree of industry churning during the sample period. We also find that urban economic growth, market maturity measured by the proportion of private sector employment, and human capital can decrease unemployment rate. Industry diversity does not stabilize unemployment; wholesale and retail industry increases unemployment fluctuations; but market maturity and human capital stabilize unemployment.

Suggested Citation

  • Fu, Shihe & Dong, Xiaofang & Chai, Guojun, 2008. "Industry specialization, diversification, churning, and unemployment in Chinese cities," MPRA Paper 15339, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:15339
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/15339/1/MPRA_paper_15339.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Gilles Duranton, 2007. "Urban Evolutions: The Fast, the Slow, and the Still," American Economic Review, American Economic Association, vol. 97(1), pages 197-221, March.
    2. Gilles Duranton & Diego Puga, 2000. "Diversity and Specialisation in Cities: Why, Where and When Does it Matter?," Urban Studies, Urban Studies Journal Limited, vol. 37(3), pages 533-555, March.
    3. John Knight & Jinjun Xue, 2006. "How High is Urban Unemployment in China?," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 4(2), pages 91-107.
    4. Gan, Li & Li, Qi, 2016. "Efficiency of thin and thick markets," Journal of Econometrics, Elsevier, vol. 192(1), pages 40-54.
    5. Giles, John & Park, Albert & Zhang, Juwei, 2005. "What is China's true unemployment rate?," China Economic Review, Elsevier, vol. 16(2), pages 149-170.
    6. Oded Izraeli & Kevin J. Murphy, 2003. "The effect of industrial diversity on state unemployment rate and per capita income," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 37(1), pages 1-14, February.
    7. Gan, Li & Zhang, Qinghua, 2006. "The thick market effect on local unemployment rate fluctuations," Journal of Econometrics, Elsevier, vol. 133(1), pages 127-152, July.
    8. Liang, Qi & Teng, Jian-Zhou, 2006. "Financial development and economic growth: Evidence from China," China Economic Review, Elsevier, vol. 17(4), pages 395-411.
    9. Keizo Mizuno & Fumitoshi Mizutani & Noriyoshi Nakayama, 2006. "Industrial diversity and metropolitan unemployment rate," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 40(1), pages 157-172, March.
    10. Simon, Curtis J, 1987. "Industrial Diversity, Vacancy Dispersion, and Unemployment," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 21(2), pages 60-73, July.
    11. David M. Drukker, 2003. "Testing for serial correlation in linear panel-data models," Stata Journal, StataCorp LP, vol. 3(2), pages 168-177, June.
    12. Barkume, Anthony J., 1982. "Differentiating employment prospects by industry and returns to job search in metropolitan areas," Journal of Urban Economics, Elsevier, vol. 12(1), pages 68-84, July.
    13. John E. Wagner & Steven C. Deller, 1998. "Measuring the Effects of Economic Diversity on Growth and Stability," Land Economics, University of Wisconsin Press, vol. 74(4), pages 541-556.
    14. Dougherty, Sean & Herd, Richard & He, Ping, 2007. "Has a private sector emerged in China's industry? Evidence from a quarter of a million Chinese firms," China Economic Review, Elsevier, vol. 18(3), pages 309-334.
    15. Attaran, Mohsen, 1986. "Industrial Diversity and Economic Performance in U.S. Areas," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 20(2), pages 44-54, July.
    16. Sylviane GUILLAUMONT JEANNENEY & PING HUA & ZHICHENG LIANG, 2006. "Financial Development, Economic Efficiency, And Productivity Growth: Evidence From China," The Developing Economies, Institute of Developing Economies, vol. 44(1), pages 27-52, March.
    17. Curtis J. Simon, 1988. "Frictional Unemployment and the Role of Industrial Diversity," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 103(4), pages 715-728.
    18. Findeisen, Sebastian & Südekum, Jens, 2008. "Industry churning and the evolution of cities: Evidence for Germany," Journal of Urban Economics, Elsevier, vol. 64(2), pages 326-339, September.
    19. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    20. Knight, John & Li, Shi, 2005. "Wages, firm profitability and labor market segmentation in urban China," China Economic Review, Elsevier, vol. 16(3), pages 205-228.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Randall Jackson, 2015. "Are Industry Clusters and Diversity Strange Bedfellows?," The Review of Regional Studies, Southern Regional Science Association, vol. 45(2), pages 113-129, Fall.
    2. Marina Malkina, 2019. "How Change in Industry Mix Can Improve the Financial Performance of Regional Economies: Evidence from the Portfolio Approach," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 67(6), pages 1561-1575.
    3. Marina Yurievna Malkina, 2018. "Instability of Financial Return of Regional Economies and Its Determinants," Spatial Economics=Prostranstvennaya Ekonomika, Economic Research Institute, Far Eastern Branch, Russian Academy of Sciences (Khabarovsk, Russia), issue 3, pages 88-114.
    4. Watson, Philip & Deller, Steven, 2017. "Economic diversity, unemployment and the Great Recession," The Quarterly Review of Economics and Finance, Elsevier, vol. 64(C), pages 1-11.
    5. repec:wyi:journl:002154 is not listed on IDEAS
    6. Ouyang, Puman & Fu, Shihe, 2012. "Economic growth, local industrial development and inter-regional spillovers from foreign direct investment: Evidence from China," China Economic Review, Elsevier, vol. 23(2), pages 445-460.
    7. Wang, Xiaoyu & Sun, Yanlin & Peng, Bin, 2023. "Industrial linkage and clustered regional business cycles in China," International Review of Economics & Finance, Elsevier, vol. 85(C), pages 59-72.
    8. Liu, Yang, 2013. "Labor market matching and unemployment in urban China," China Economic Review, Elsevier, vol. 24(C), pages 108-128.
    9. Randall Jackson, 2015. "Fellows Address: Are Industry Clusters and Diversity Strange Bedfellows?," Working Papers Working Paper 2015-04, Regional Research Institute, West Virginia University.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Watson, Philip & Deller, Steven, 2017. "Economic diversity, unemployment and the Great Recession," The Quarterly Review of Economics and Finance, Elsevier, vol. 64(C), pages 1-11.
    2. Jing Chen, 2017. "Geographical Scale, Industrial Diversity and Regional Economic Stability," Working Papers Working Paper 2017-03, Regional Research Institute, West Virginia University.
    3. Jing Chen, 2018. "Interpreting Economic Diversity as the Presence of Multiple Specializations," Working Papers Working Paper 2018-02, Regional Research Institute, West Virginia University.
    4. Andrey A. GNIDCHENKO, 2011. "Defragmentation Of Economic Growth With A Focus On Diversification: Evidence From Russian Economy," Theoretical and Practical Research in Economic Fields, ASERS Publishing, vol. 0(1), pages 45-85, June.
    5. Saheum Hong & Yu Xiao, 2016. "The Influence of Multiple Specializations on Economic Performance in U.S. Metropolitan Areas," Sustainability, MDPI, vol. 8(9), pages 1-16, September.
    6. Andrey GNIDCHENKO, 2011. "Defragmentation Of Economic Growth With A Focus On Diversification: Evidence From Russian Economy," Theoretical and Practical Research in the Economic Fields, ASERS Publishing, vol. 2(1), pages 44-80.
    7. Randall Jackson, 2015. "Fellows Address: Are Industry Clusters and Diversity Strange Bedfellows?," Working Papers Working Paper 2015-04, Regional Research Institute, West Virginia University.
    8. Guariglia, Alessandra & Poncet, Sandra, 2008. "Could financial distortions be no impediment to economic growth after all? Evidence from China," Journal of Comparative Economics, Elsevier, vol. 36(4), pages 633-657, December.
    9. Samargandi, Nahla & Fidrmuc, Jan & Ghosh, Sugata, 2015. "Is the Relationship Between Financial Development and Economic Growth Monotonic? Evidence from a Sample of Middle-Income Countries," World Development, Elsevier, vol. 68(C), pages 66-81.
    10. Steven Deller & Philip Watson, 2016. "Spatial variations in the relationship between economic diversity and stability," Applied Economics Letters, Taylor & Francis Journals, vol. 23(7), pages 520-525, May.
    11. Florian Noseleit, 2020. "The Role of Entry and Market Selection for the Dynamics of Regional Diversity and Specialization," Regional Studies, Taylor & Francis Journals, vol. 49(1), pages 76-94, July.
    12. Duranton, Gilles & Puga, Diego, 2014. "The Growth of Cities," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 5, pages 781-853, Elsevier.
    13. Balcilar, Mehmet & Gupta, Rangan & Lee, Chien-Chiang & Olasehinde-Williams, Godwin, 2018. "The synergistic effect of insurance and banking sector activities on economic growth in Africa," Economic Systems, Elsevier, vol. 42(4), pages 637-648.
    14. Joshua Drucker, 2009. "Trends in Regional Industrial Concentration in the United States," Working Papers 09-06, Center for Economic Studies, U.S. Census Bureau.
    15. Steven C. Deller & Tessa Conroy & Philip Watson, 2017. "Women business owners: a source of stability during the great recession?," Applied Economics, Taylor & Francis Journals, vol. 49(56), pages 5686-5697, December.
    16. Hong Vo, Duc & Van Nguyen, Phuc & Minh Nguyen, Ha & The Vo, Anh & Cong Nguyen, Thang, 2020. "Derivatives market and economic growth nexus: Policy implications for emerging markets," The North American Journal of Economics and Finance, Elsevier, vol. 54(C).
    17. Yang, Junhong & Guariglia, Alessandra & Peng, Yuchao & Shi, Yukun, 2022. "Inventory investment and the choice of financing: Does financial development play a role?," Journal of Corporate Finance, Elsevier, vol. 74(C).
    18. Roberto Ezcurra, 2011. "Unemployment Volatility and Regional Specialization in the European Union," Regional Studies, Taylor & Francis Journals, vol. 45(8), pages 1121-1137.
    19. Michael Adusei, 2013. "Financial Development and Economic Growth: Evidence from Ghana," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 7(5), pages 61-76.
    20. Hwang, Jen-Te & Chung, Chien-Ping & Wang, Chieh-Hsuan, 2010. "Debt Overhang, Financial Sector Development And Economic Growth," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 51(1), pages 13-30, June.

    More about this item

    Keywords

    Industry structure; specialization; industry diversity; unemployment; churning;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:15339. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.