The Causal Relationship And Determinants Of Industrial Agglomeration And Urban Labor Productivity

Since reform and opening up, China's economy has developed rapidly, but at the same time the growing economic gap of China's eastern region and western regions expands. This gap is not only for the performance of the total economy but also for the gap of economic efficiency. At the same time China's industry in market forces continues to aggregation. Therefore the relationship between urban industrial concentration and labor productivity as well as how they were the determined is what this article concerns.According to the new economic geography and economic geography theory, the micro-economic mechanism of concentration, the endogenous relationship between urban industrial concentration and labor productivity, and external principle of the nearby cities, this article uses space econometric approach to analysis urban industrial concentration and labor productivity. Firstly, the article analyses the course of the gathering of China's industrial space distribution and the characteristics of industrial concentration new. This article calculates the space-related degree of industrial concentration. And the result shows that China's industry is not evenly distributed in space and experiences the gathered - scattered - gathered process and continues to gather in a small number of advantageous areas new; secondly, this article uses the new economic geography and economic geography theory and Ciccone and Hall (1996) model to analyze the deciding factor of China's urban industry concentration and labor productivity and the interaction mechanism of industry concentration and labor productivity; thirdly, this article constructs simultaneous equations of China's urban industrial concentration and labor productivity and uses 2006 data on cities for a cross-section analysis.3SLS estimates show that the relative concentration of China's industry and labor productivity are reciprocal causation and strengthen each other; industrial concentration and productivity in the neighboring cities have significant space viciousness and continuity . The multidimensional measures of agglomeration also show that density of labor in Chinese cities is too high, adversely affecting productivity. Finally, on the basis of the above analysis, this articles briefly discuses the policy meaning of the findings of this article.