Urban Agglomeration Economies And Urban Economic Growth

At present, Chinese economy develops dramatically, so do our cities. The prosperous cities play significant parts in promoting regional economic development. Widening gap between different cities can also be explained from the perspective of urban economy. The theory of spatial economy and theory of urban agglomeration, one of most important factors and inner mechanisms of city development, provide us a new explanation of these phenomena.This paper is an empirical analysis of the correlation between urban agglomeration and city productivities. By building theoretical city productivity function and empirical model, we intend to find the part of city productivity that can be explained by urban agglomeration. Besides, this paper quantifies the role urban agglomeration economies play in the promotion of city productivity. We select non-agricultural labor force density to represent urban agglomeration economies, the average wage level of workers to represent urban productivity, lag non-agricultural labor force density in 1991 as an instrumental tool. By 2SLS regression, we find that urban agglomeration economies have a significant positive effect on urban labor productivity. Given other factors, urban non-agricultural labor force per unit area increased 1%, the percentage that average wage of urban workers increased is 5.67%. Besides the non agricultural labor force density, the city's human capital level, urban second and third industry output ration, per capital of public financial expenditure, per capital number of actually used foreign capital and the major economic regions in which the city locates, can significantly affect urban average wage. The estimated results are 1.2, 4.4,-0.97,-0.03,1.21,0.963.Based on theoretical analysis and empirical research, we further discuses some mechanisms of promoting agglomeration economy and the system of cities in China.