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Co-location and Spatial Wage Spillovers in China: The Role of Foreign Ownership and Trade

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  • Elliott, Robert J.R.
  • Zhou, Ying

Abstract

This paper examines how wages in China are influenced by the interaction and co-location of firms across geographical space. Specifically, and with an emphasis on globally engaged firms and China’s uneven growth across regions we use a spatial econometric approach to estimate the direct and indirect impact of foreign-ownership and export participation on wages. Spatial Durbin Model results reveal an indirect effect of foreign-ownership and exporting on the compensation of workers in co-located firms as well as evidence in support of the standard direct effect that foreign firms, exporters, and firms with a highly educated workforce pay higher wages.

Suggested Citation

  • Elliott, Robert J.R. & Zhou, Ying, 2015. "Co-location and Spatial Wage Spillovers in China: The Role of Foreign Ownership and Trade," World Development, Elsevier, vol. 66(C), pages 629-644.
    • Handle: RePEc:eee:wdevel:v:66:y:2015:i:c:p:629-644
    DOI: 10.1016/j.worlddev.2014.09.001
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