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Industrial agglomeration and difference of regional productivity

Author

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  • FAN Jianyong

    (Institute of World Economy, Fudan University, Shanghai 200433, China)

Abstract

Locally increasing returns is the source of industrial agglomeration, and it improves regional labour productivity and drives up regional inequality. Using data of 261 cities in 2004 in China, I find that the estimated elasticity of (average) labor productivity with respect to employment density is about 8.8%, compared with 5% in the USA and 4.5% in the EU. Further, I find that the difference of agglomeration effects among provinces exists two cases: insignificant difference and significant difference. However, under the polarization of industrial location, both two cases enlarge the inequality of labor productivity among provinces, and drive up the divergence of regional income.

Suggested Citation

  • FAN Jianyong, 2007. "Industrial agglomeration and difference of regional productivity," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 2(3), pages 346-361, September.
  • Handle: RePEc:fec:journl:v:2:y:2007:i:3:p:346-361
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    File URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-007-0018-9
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    More about this item

    Keywords

    industrial agglomeration; labor productivity; locally increasing returns;
    All these keywords.

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R19 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Other
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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