Wage Premium and Agglomeration Economies——Based on Empirical Analysis of Panel Data of Chinese Cities
XU Xiao-jing1, TIAN Xiang-hui2
1.The Institute for the Development of Central China, Wuhan University, Wuhan 430072, China; 2.School of Economics and Management, Qingdao Agricultural University, Qingdao 266109, China
Abstract Based on new economic geography model, this paper uses panel data of Chinese cities and also uses system Generalized Method of Moment (GMM) to deal with endogeneity in the process of identification and estimation of urban agglomeration economies to identify the internal relation between urban agglomeration economies and wage premium. The empirical results show that average wages and the market potentials are significantly positively related, and it appears significant at 1% significance level, which explains that labor is able to achieve higher ability in the cities with higher potential markets, or that the cities with higher potential markets are able to pay higher wages to labor. The results reveal the main reason of why labor flow into big cities and more advanced regions.
XU Xiao-Jing,TIAN Xiang-Hui. Wage Premium and Agglomeration Economies——Based on Empirical Analysis of Panel Data of Chinese Cities. Economic Survey, 2015, 32(5): 014.
2015, Vol. 32 
