Industry Agglomeration and Wage Differentiation: An Empirical Study on Taiwan’s Manufacturing Industry

Chih Cheng Chen

Regional and Sectoral Economic Studies, 2013, vol. 13, issue 2, 147-160

Abstract: In this paper, we applying the segmented regression model to test the concept of critical mass in the model of agglomeration externality by setting agglomeration degree(AD) as the threshold variable to investigate the relationship between the industry agglomeration and the wage differentiation of employees in Taiwan’s manufacturing industry. Our estimated results prove that there exists a threshold effect of AD as determining wage rate of an employee and confirm that the AD of an industry can significantly influences the wage rate of an employee, no matter where he/she works. The marginal effect of AD on wage rate is higher for workers who work outside the cluster than the insiders in the manufacturing industry, as well as in the high-tech industries.

Keywords: industry agglomeration; wage differentiation; segmented linear regression; manufacturing industry. (search for similar items in EconPapers)
Date: 2013
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