Industrial Agglomeration and Wage Inequality in China

Yao Li (liyao@uestc.edu.cn)

MPRA Paper from University Library of Munich, Germany

Abstract: This paper estimates nonlinear structural wage equations derived from NEG model with data on 327 cities in China. The estimation results show that the variation of wage level across cities in China is associated with proximity to large markets. The estimated elasticity of substitution of China is smaller than those of the other countries studied in previous research. It indicates that with the same increase of sub-regional market size, China may suffer more serious regional inequality problems. My estimation shows that although increased agglomeration can increase each city’s wage level, it may also increase the wage gap between large and small cities.

Keywords: New Economic Geography; Wage Inequality; Elasticity of Substitution (search for similar items in EconPapers)
JEL-codes: F12 O24 R12 (search for similar items in EconPapers)
Date: 2008-05, Revised 2008-10
New Economics Papers: this item is included in nep-cna, nep-geo, nep-lab, nep-tra and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:11426

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