Industrial agglomeration and difference of regional productivity

Jianyong Fan ()
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Jianyong Fan: Institute of World Economy, Fudan University, Shanghai 200433, China

Frontiers of Economics in China-Selected Publications from Chinese Universities, 2007, vol. 2, issue 3, 346-361

Abstract: Locally increasing returns is the source of industrial agglomeration, and it improves regional labour productivity and drives up regional inequality. Using data of 261 cities in 2004 in China, I find that the estimated elasticity of (average) labor productivity with respect to employment density is about 8.8%, compared with 5% in the USA and 4.5% in the EU. Further, I find that the difference of agglomeration effects among provinces exists two cases: insignificant difference and significant difference. However, under the polarization of industrial location, both two cases enlarge the inequality of labor productivity among provinces, and drive up the divergence of regional income.

Keywords: industrial agglomeration; labor productivity; locally increasing returns (search for similar items in EconPapers)
JEL-codes: J61 R19 R23 (search for similar items in EconPapers)
Date: 2007
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