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Job creation or job relocation? Identifying the impact of China's special economic zones on local employment and industrial agglomeration

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  • Zheng, Liang

Abstract

Since the early 1980s, special economic zones (SEZs) in China have benefited from targeted place-based policies intended to promote local employment and economic growth. What remain poorly understood is whether SEZs serve to give birth to new firms, or rather attract and support the re-establishment of firms from other places. To address this question, this paper examines the impact of SEZs on employment growth in rural counties in China. Using ASIF panel data representing the activity of manufacturing firms for the period 1999 to 2008, this paper assesses the employment effects of SEZs according to firm births, relocation, expansion, and firm closure. By matching counties with future SEZs as comparison groups, the difference-in-differences estimates show that SEZs significantly increase employment in rural counties due to the creation of new firms and the expansion of existing large firms; in contrast, SEZs fail to promote firms to move in and restrain firms from moving out. Further, data analysis reveals significant regional heterogeneity, with the employment effects of SEZs on firm entry strongest for the eastern coastal region. Finally, we confirm that SEZs tend to reduce local industrial agglomeration in the eastern and central regions.

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  • Zheng, Liang, 2021. "Job creation or job relocation? Identifying the impact of China's special economic zones on local employment and industrial agglomeration," China Economic Review, Elsevier, vol. 69(C).
    • Handle: RePEc:eee:chieco:v:69:y:2021:i:c:s1043951x21000699
    DOI: 10.1016/j.chieco.2021.101651
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    More about this item

    Keywords

    Special economic zone; Place-based policy; New firm formation; Firm relocation;
    All these keywords.

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • P25 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Urban, Rural, and Regional Economics
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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