Study On How Does The Industrial Agglomeration Affects The Regional Wage Gap

Since Marshall(1920),the theory of industrial agglometration has been achieved considerable achievements.Scholars from different perspectives of agglometration more and more mature and perfect. Empirical researches have indicated that the theory of industrial agglometration can be used to explain the industry concentration in the space , as well as the improvement of labor productivity. On the other hand, since China's reform and opening up, its industrial structure has been changing from the"large and comprehensive"and"small and comprehensive"model to the model of industrial gathering in the eastern coastal areas gradually. This study is to demonstrate in the context of China, Industry agglometration have the facilitating role on wages.According to these research objects, we make a detail introduction to the theory of industrial agglometration and look back the factors related to the regional wage gap , and review the domestic and foreign empirical research literatures of domestic, and point out the deficiencies of domestic researches. Then, taking a explicit look on the relationship between the industrial agglometration and regional wage gap with the data over ten years, absorbing and learning the effective studying ways to induce the effectual mechanism for the regional wage level with the theory of new economic geography ,industrial organization and national competition advantage .Finally, by referring to the measure method on agglometration effect developed by Ciccone and Hall(1996),and using the panel data of 29 provinces from 1995 to 2008, we empirically analyze the effect by OLS, including full sample and sub-sample analysis. The empirical results show that,(1)1995-2008,the elasticity coefficient(0.0438) of employment density to wage is lower than the European's(5%);(2) There is agglometration effect differences between the regions,the effect of eastern coastal areas are much higher than the central region and the west region, So the elasticity coefficient in eastern coastal is higher than the European's, but the central region and west region is not;(3) Based on the above conclusions, I believe that due to the agglometration effect of the eastern coastal areas and industrial agglometration in promoting the wages are higher than other areas,the internal driving force exits which make the labours and other factors of production transfer to eastern coastal areas. On the other hand, the transferring of the labours and other factors of production to the eastern areas strengthens the agglometration effect further. Due to the"accumulation circle"(Myrdal,1957), the "snowball effect"leads to the gap between the eastern coastal areas and other areas widen.Finally, based on theoretical analysis and empirical results, we come up with corresponding policy recommendations to the government to help them optimizing industrial agglometration and narrowing regional wage gap.