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Home market effect, spatial wages disparity: an empirical reinvestigation of China

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  • Jian Wang
  • Junqian Xu

Abstract

It is argued that the size of a region affects the spatial configuration of economic activities, known as the home market effect (HME). Concerning the definition of HME, it can be interpreted from different aspects, but most empirical studies testing HME focus mainly on investigating firm share and exports. This paper empirically investigates the HME in terms of wages in the case of China by using panel data for the period 1980–2012. We find that the wages in coastal regions are higher than those in the interior, due to the size differences between regions. Additionally, regional inequality in wages between the coastal and interior regions evolves in an inverted U-shaped curve during periods of regional integration. The evolution of the space-economy in China during the past three decades supports the inverted U-shaped pattern predicted by the theoretical models of spatial economics. Copyright Springer-Verlag Berlin Heidelberg 2015

Suggested Citation

  • Jian Wang & Junqian Xu, 2015. "Home market effect, spatial wages disparity: an empirical reinvestigation of China," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 55(2), pages 313-333, December.
    • Handle: RePEc:spr:anresc:v:55:y:2015:i:2:p:313-333
    DOI: 10.1007/s00168-015-0700-2
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    2. Yiming Zhou, 2019. "Home market effect, land rent, and welfare," Asia-Pacific Journal of Regional Science, Springer, vol. 3(2), pages 561-580, June.

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    More about this item

    Keywords

    R12; F1;

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • F1 - International Economics - - Trade

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