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Clustering, Growth, and Inequality in China

Di Guo, Kun Jiang, Cheng-Gang Xu and Xiyi Yang

No 12543, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This study examines the effects of China's industrial clusters on its economic growth and urban-rural income inequality. A density-based index (DBI) is developed to capture the unique features of such clusters in China. From a county-level DBI panel data constructed based on firm-level and county-level datasets, we find that strong clusters and entrepreneurial clusters substantially enhance economic growth. Moreover, entrepreneurial clusters reduce urban-rural income inequality by increasing the income of rural residents. Identification issues are carefully addressed by deploying an instrumental variable approach.

Keywords: China; clustering; Geography; growth and inequality; institutions (search for similar items in EconPapers)
JEL-codes: D2 H7 O1 R1 R3 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ent, nep-tra and nep-ure
Date: 2017-12
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