Agglomeration and Firm Wage Inequality: Evidence from China
Anping Chen (),
Tianshi Dai and
MPRA Paper from University Library of Munich, Germany
China is experiencing rapid urbanization with the steady emergence of large cities, leading to policy discussions of the role of large cities in its development. While the consensus is that agglomeration plays an important role in economic development and large cities can act as engines of economic growth, there is relatively little empirical knowledge of the effects of agglomeration on inequality. In this study, we apply panel data from a micro firm-level survey and from city-level data to investigate whether there is a causal relationship between agglomeration and establishment wage dispersion in China. Given potential endogeneity of city size, we employ an instrumental variable regression (IV) approach. We find strong evidence that agglomeration has significant effects on wage dispersion in the short- and long-run. The link between agglomeration and wage dispersion is heterogeneous across regions. The spatially varying results appear to be due to different stages of development. Our results are consistent with two-sided sorting models in that it appears that the most productive and least productive firms are moving from inland cities to the coast.
Keywords: Agglomeration; Wage Dispersion; City Size; Inequality; China (search for similar items in EconPapers)
JEL-codes: R1 (search for similar items in EconPapers)
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: Track citations by RSS feed
Downloads: (external link)
https://mpra.ub.uni-muenchen.de/83516/1/MPRA_paper_83516.pdf original version (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:83516
Access Statistics for this paper
More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().