Assessing agglomeration economies in the Yangzi River Delta, China: a bayesian spatial econometric approach

Hashiguchi Yoshihiro and Chen Kuang-hui

No 339, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: This paper estimates the elasticity of labor productivity with respect to employment density, a widely used measure of the agglomeration effect, in the Yangtze River Delta, China. A spatial Durbin model is presented that makes explicit the influences of spatial dependence and endogeneity bias in a very simple way. Results of Bayesian estimation using the data of the year 2009 indicate that the productivity is influenced by factors correlated with density rather than density itself and that spatial spillovers of these factors of agglomeration play a significant role. They are consistent with the findings of Ke (2010) and Artis, et al. (2011) that suggest the importance of taking into account spatial dependence and hitherto omitted variables.

Keywords: China; Local economy; Econometric model; Agglomeration economies; Spatial autocorrelation; Endogeneity; Bayesian estimation; Omitted variables; Bayesian; Spatial Durbin model (search for similar items in EconPapers)
JEL-codes: C21 C51 R10 R11 R15 (search for similar items in EconPapers)
Date: 2012-03-01
New Economics Papers: this item is included in nep-geo, nep-pbe, nep-tra and nep-ure
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Citations: View citations in EconPapers (4)

Published in IDE Discussion Paper = IDE Discussion Paper, No. 339. 2012-03-01

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