Research On Wage Spatial Structure

Wages, as the form of labor factor’s prices and the major part of residents’ income, its spatial structure has great significance in guiding rational flow of labor force/realizing regional economic agglomeration development and optimization and efficiency of economic spatial structure. This dissertation takes the wage distribution pattern of spatial dimension as its goal. Based on the related literature and the empirical fact, this dissertation, using new economic geography as its theoretical core, discusses of the basic model, the time evolution and regional differentiation of China’s wage spatial structure with the linear and nonlinear methods. The research results in this dissertation confirms the theoretical expectation for relationship between spatial demand correlation and wage level in the new economic geography theory and its agglomeration mechanism, specify general pattern of China’s wage spatial structure, and obtain the time evolution direction and regional differentiation regularity in the basic pattern at the same time.Many aspects of the economic and social background provide the realistic-foundation of this dissertation. Firstly, adjustment of China’s regional development strategic and regional disparity. After China’s reform and opening up, the regional economic policy experienced the transformation from the regional disequilibrium development strategy to regional coordinated development strategy, but regional economic disparity, the pay gap between the provinces included, did not shrink due to the transition of the regional development strategy. Secondly, labor mobility and evolution of regional wage gap. At the same time, the establishment and perfection of China’s socialist market economic system give market the fundamental role to regulate resources allocation. System adjustment brings labor mobility to expand in scale/scope and level, but the greater marketization did not achieve the anticipation in neoclassical theory that the factor price is going to be equalized. Thirdly, wage has extensive economic and social relevance. As the main form of labor factor price and employee compensation, wage has extensive and profound connection with multiple aspects of economy and society.Each part is organized according to logical relationship basically. The first part, introduction, to establish the research background/the research significance/the research objectives/structure and innovation points of the dissertation, and the definition of basic concepts is included. The second part, literature review, the dissertation expounds the theoretical origin/theoretical foundation and core of theory for wage spatial structure, and then focus on the sorting and summary for empirical research. Also, the deficiency-existing in these studies is discussed which is regard as desired contribution in this dissertation. The third part, factual description of wage spatial structure, the fact of wage spatial structure is depicted to analyze the basic status of wage growth in China and the provinces,and variety of the extremum statistic method and discrete trend analysis method is used to discuss the changes of wage gap on space in China. The fourth part, theoretical analysis of wage spatial structure, Theory analysis of wage spatial structure is conducted by neoclassical framework and framework of new economic geography. Theory illustration under the neoclassical framework shows the marginal productivity theory core position in determination of wage level, and discusses factor price equalization rooted from labor migration and product trade and spatial real wage gap stem from agglomeration economy. Under the framework of new economic geography theory, spatial demand correlation/agglomeration under the condition of transportation cost and evolution mechanism of wage spatial structure is illustrated by mathematical deduction. The fifth part, empirical analysis, it was carried out in two trains of thought. On the one hand, the dissertation employ usual linear analysis using the. market potential as the core variable, and aims at investigation on the influence of related factors on the wage spatial structure from the macroscopic comprehensive, which provides indirect evidence for new economic geography theory. The dissertation, on the other hand, exert nonlinear parameter estimation for nominal wages equations in new economic geography, and aims at exploration the internal operation of the market potential and core model, this provide the details of wage spatial structure and direct evidence for new economic geography theory. The general pattern of wage spatial structure in national level is depicted by the two interactive empirical thinking, which is used as a reference for analysis of periods subsample and economic region subsample to reveal time evolution and regional differentiation of wage spatial structure under general pattern in national level. The sixth part is policy implications and theoretical prospect. Based on summarizing the research discovery, this dissertation puts forward policy suggestions targeted to three hot issues in current construction of China’s economy which includes the development of underdeveloped regions/the transformation of economic development patterns/optimization of spatial structure. This dissertation also prospects the future innovation direction on the basis of contrast neoclassical framework and new economic geography framework and summarization of defects in new economic geography theory from empirical study.This paper obtains several aspects of conclusions.Firstly, the regional inequality of wage is with different characteristics as magnanimity method.(1) the basic wage growth trend analysis shows that, there is a great wage gap among regions, wage growth is unbalance in region&among regions, fluctuation of wage growth conform to macro economic operation and national policy adjustment in timing,(2) The extreme value statistics analysis of wage gap shows that, the possible spatial locking effect makes samples with stability in the high wages and low wage city; the absolute discrete degree is increasing between cities with high wage and cities with low wage, differentiation of salary in space is growing.(3) The discrete statistical analysis of wage shows that, degree of absolute discrete of wages in cities is increasing, but its growth rate is lower than the growth of average wage, which cause a certain degree of convergence in relative wage gap. At the same time, the role of population continued to increase in wage inequality evolution.Secondly, market potential under the framework of the new economic geography provides core explanatory power on China’s wage spatial structure, and the factors under neoclassical framework has different influence on the city wage level.(1) Scatter plot and simple regression model shows that the market potential variable under the framework of new economic geography has significant explanatory power on urban wages differentiation, confirmed the important role of spatial demand correlation and distance to the wages space. Not only the region’s potential demand of the its products offered by other city can determine wage level, but also the city’s output and internal distance plays an important role in wage spatial structure.(2) The effect that fundamentals of the industrial structure pull up wage level related to many factors; private economy has significant lifting effect on urban wage. Capital accumulation, human capital, physical capital included, also showed a significant heighten to wage; the influence of foreign direct investment on wage is related to China’s foreign policy; because of China’s unemployment statistics and nothing serious unemployment, labor market has weak influence on wage.Thirdly, the inner working of wage space structure is revealed. Given the core explanatory power for wage spatial structure from market potential was confirmed, nonlinear parameter estimation for nominal wage equation is used to reyeal the role of market potential and the core model parameters in the wage structure. The results showed that parameters has important/stability influence on the wage spatial structure, this confirmed that the new economic geography holds the core position in the interpretation for wage spatial structure once again.(1)Elasticity of substitution among different types manufactured goods is large and correspondence with its larger demand price elasticity/cost-plus rate and economies of scale.(2)The proportion of industrial consumption in workers’incomes delta is large and higher than1, not only beyond the model set, but also make the important "black hole" conditions cannot be met. This deviation is rooted in the deviation between model set and actual economic situation, the results not only show the implicit assumption in the model and the possible flaws in theory, but also indicate the direction of the theory innovation and the necessity of theoretical innovation in policy.(3)Transportation cost parameters tau is consistent with the theoretical expectation, the estimate result also shows that transport costs rise with the increase of distance, and shows that the short distance transportation cost has much more significance in agglomeration economic.Fourthly, relevant parameters and factors shaping. the wage spatial structure is of dynamic evolution continuously and show some temporal characteristics. Time evolution analysis of wage spatial structure discuss its time evolution mechanism firstly, and then, panel data is divided into three periods subsamples, and is used to linear analysis using market potential as the kernel variable. This study represents the existing conclusions and has some new discovery at the same time.(1)The elasticity of market potential variable to wages in cities rise volatility. The elasticity of market potential variable to wages in cities is on the raise, this means that the new economic geography has an enhancing role of wage spatial structure and the importance of distance increase. The elasticity of market potential variable to wage in cities have volatility, and the fluctuation corresponds to macroeconomic operation/social and economic system reform on the timing. This reflects the interference and interaction between wage spatial structure and social economic operation conditions/changes of the economic subject behavior/macro economic environment. Influence of the neoclassical economics factors and economic transition factors on wage spatial structure occurred the dynamic evolution also. The influence of industrial structure variable on wage in cities reduce continuously, this indicates that the higher wage from the fundamentals of the industrial structure may be in a process of dissipation constantly. The influence of economic sectors to wage spatial structure has great volatility, the private economy improve wage in the long term, and its way of influence to wage is more sensitive to labor market conditions and economic growth. The promotion of wage in cities from level of human capital rise continuously, but the elasticity increase is falling, this suggests that the human capital is becoming important assets for cities, and its wage effect have the trend of diminishing marginal. Although the fixed investment has significance for growth of total output of city, the effect on urban wage growth is relatively limited, and this influence is weaking continuously.(2) Tendency and structural characteristics exist in the evolution of parameters of the core model. The elasticity of substitution between different types of industrial products epsilon not only has a bigger value, but also shows a significant upward trend, this show that market competition of manufactured goods is strengthen continuously and reduce the degree of promotion of product diversification to consumer utility. Accordingly, industrial demand price elasticity rise sustainly, which means that the market structure of monopolistic competition in new economic geography approximate toward a fully competitive market. The cost-plus rate calculated implied an reduced profitability in firms. Scale economy of manufacturers remarked by the same parameter is reducing, the trend conforms to the intrinsic logic of model but deviations to general understanding, the deviation also derived from implicit assumption of the model. The proportion of industrial consumption in workers’incomes delta is in a volatility rising trend overall, this illustrate that the importance of manufactured goods in residents’consumption increase continuously, the trend leads to strengthened agglomeration force in the new economic geography and makes the estimate results more and more far from a "black hole" conditions. Transportation cost parameters tau is in the operating state of falling volatilitly, making long distance transportation cost more greatly reduced in the process of transport costs falling overall, it can improve the agglomeration effects in small region and lower the cost of long distance space diffusion. The fluctuation of parameters has synchronicity, and consistent with China’s economic system reform on the timing.Fifthly, there are regional differences in shaping parameters and factors related to wage spatial structure, and they show some rules of regional differentiation. Analysis of regional differentiation of wage spatial structure discuss its relevant mechanism firstly, and then, the panel data is divided into five regional subsamples which is used to linear analysis using market potential as the core variable. The analysis represents the existing conclusions and has new discovery at the same time.(1) The impact of the market potential variable/distance inside the city and other control variables on wage spatial structure shows significant regional differentiation characteristics. The elasticity of market potential variable in each economic region is consistent with the polarization effect or central city status. The results on the one hand shows the significant regional differences of the general pattern of wage spatial structure, on the other hand shows the possible association between regional differentiation of wage spatial structure and regional spatial equilibrium/spatial interaction. Because of different treatments to cities inner distance, the parameter of market potential has discrepancy, the results on the one hand shows the developed region itself can be as a big market for its products, and has stronger ability of self sustaining development, on the other hand shows the effect of historical basis/development status to wage spatial structure. Similar to the time evolution of wage spatial structure, cities’inner distance has increased influence to wage spatial structure with the level of economic development and integration deepening. The influence of other control variables to wage spatial structure also exist regional differentiation. Industrial structure variable has a significant influence on urban wage only in the developed areas. Ascension of private economy to urban wage level shows a trend of diminishing marginal. The mode of action of human capital for urban wage is closely related to population mobility and spatial competition, labor mobility and allocation efficiency is the premise that human capital plays a role.(2) There is obvious regional difference in parameters of the core model effect on the wage spatial structure. The elasticity of substitution between different types of industrial products epsilon and industrial products demand price elasticity is higher in developed areas, it means that the monopoly power in the economy is dissipating in the process of economic development. Accordingly, developed region have lower cost-plus rate and scale economy parameter, this shows that general pattern of wage spatial structure in the country as a whole has nuances in each economic region. Developed region have a higher proportion of industrial consumption in workers’ incomes delta, it means that stronger agglomeration economy power exits in industrial production. Deeper integration in developed region leads to lower transportation cost parameter. There is some degree of interoperability for each parameter in the economic region in the numerical size and the trend of fluctuations, it shows the systematicness of operation of the regional economic and wage spatial structure. The study on the wage spatial structure in this dissertation may have marginal contribution to related fields. For example, an empirical test of the new economic geography theory and wage spatial structure combines indirect evidence and direct evidence. The linear analysis using market potential as core variable make up indirect evidence of new economic geography and wage spatial structure, nonlinear parameter estimation of wage equation provides direct evidence for related theory, but this kind of research is not only limited in number, but also to be excavated. Moreover, the time evolution and regional differentiation of wage spatial structure were analyzed, and direction of time evolution and rule of regional variation of wage spatial structure were cleared. In additionally, based on empirical research, this dissertation points out the flaws of new economic geography models. This study not only provides empirical analysis for economic spatial theory, which is convenient for comparison on the ability and applicability of theory elements on shaping spatial structure; but also it has important practical significance for regional economic development/the development of spatial economic efficiency/transformation of the mode of economic development.