Industrial Agglomeration And Wage Change:an Empirical Comparison Based On China’s Provincial Data

Industrial Agglomeration is one of main topics brought about by New economic geography (NEG). Most publications around this topic so far focus on the driving forces and mechanism of agglomeration and also incremental effects of productivity of production factors. Researchers have identified and classified agglomeration into two types:specialization, agglomeration of same activities in a specific sector, and diversification, or agglomeration of economic activities belong to different production sectors.The question is, which one of the two agglomeration types is more conducive to the enhancement of the labor remuneration? So far not been systematically studied, this study discuss wether industrial agglomeration can increase wage level.then subdivide how different type of agglomeration have effect on wage.First this article summarizes studies on agglomeration theory, wage determination theory and correlational research and make commentary. Based on the achievements, this paper tries to find out the mechanism of industrial agglomeration affects wages, and analyses wage effects of different agglomeration types:Industrial agglomeration impacts on regional wage trough four channels as labor market pooling.expansion of scale, technology and knowledge spillover and related industry gathering; The theoretical basis of specialization gathering influence wage is the wage equation built by Fujita etc.(1999). it have an effect on wage though affecting regional market potential. The theoretical basis of how diversified gathering affect wage are Marshall’s conjecture and Survival Wage Theory, Marshall consider diversified gathering as a supplement of employment and will reduce the area wage level. Then we verify the mechanism through realistic data of28provinces in our country, and investigated the direction and extent of the overall level of agglomeration and different types of gathering impact on wage. This study starting from the provincial reality, analysis wage effect of industrial agglomeration through two levels as overall industrial agglomeration degree and divide types agglomeration degree, has theoretical importance as well as practical significance to explore the current situation of China’s industrial agglomeration and wage differentials.After realistic comparison and empirical analysis panel data between year2003-2011of China’s28provinces, we verify that industrial agglomeration have a significant positive effect on area wage level, and the eastern part has the most obvious phenomenon of industrial agglomeration. Based on the results.we then does a further realistic comparison and empirical research on the data of several typical provinces in the eastern part which have obvious agglomeration phenomenon, found that the specialization of agglomeration is more conductive to the improvement of area wage level,the degree of diversified agglomeration is negatively con-elated with regional wages.Finally, according to the results of the theoretical and empirical analysis in this paper, we put forward some policy suggestion:The government should reasonably guide the transfer of industries from the eastern region to the central and western regions, and promote the development of the central and western regions, speed up the process of ownership reform and market-oriented.optimize the industrial development patterns.