Home market effect, spatial wages disparity: an empirical reinvestigation of China

Jian Wang () and Junqian Xu ()

The Annals of Regional Science, 2015, vol. 55, issue 2, 313-333

Abstract: It is argued that the size of a region affects the spatial configuration of economic activities, known as the home market effect (HME). Concerning the definition of HME, it can be interpreted from different aspects, but most empirical studies testing HME focus mainly on investigating firm share and exports. This paper empirically investigates the HME in terms of wages in the case of China by using panel data for the period 1980–2012. We find that the wages in coastal regions are higher than those in the interior, due to the size differences between regions. Additionally, regional inequality in wages between the coastal and interior regions evolves in an inverted U-shaped curve during periods of regional integration. The evolution of the space-economy in China during the past three decades supports the inverted U-shaped pattern predicted by the theoretical models of spatial economics. Copyright Springer-Verlag Berlin Heidelberg 2015

Keywords: R12; F1 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/s00168-015-0700-2

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