Research Of Service Industry Agglomeration’s Effect On The Labor Productivity Of Service Industry

With the world economy transforming from "industrial economy" to "serviceeconomy", the service industry account for an increasingly large proportion in thenational economy and play an increasingly prominent role in boosting the economicgrowth. The process of its development also showed the distinct characteristics ofindustrial agglomeration. However, the agglomeration degree of China’s serviceindustry is not high on the whole, with the structure scattered, format types too few,and value-added service ability weak, leading to the problem of insufficientcompetitiveness. Based on this background, the paper is dedicated to the study ofthe facilitation of China’s service industry agglomeration to labor productivity, inorder to promote the sound development of China’s service industry.Firstly, industrial agglomeration theory and its influence on labor productivityare summarized and reviewed in detail, the shortcomings of the present research arepointed out and the research goal is worked out in this paper. Secondly, the indicatorsto measure the degree of agglomeration are analyzed and summarized, and the spatialGini coefficient and Location entropy index are alternatively used to investigate thecurrent situation of agglomeration of service industry in china. The current situationand differences of China’s industrial agglomeration are analyzed from aspects of areaand industry, drawing a conclusion that the agglomeration degree of China’s serviceindustries is generally not high, the industry structure is transforming and upgradingfrom the low side to the high end, and the professional concentration average presentsone kind of small-scope fluctuation, overall decline and increasing gap between theopposite poles. This paper studies and discusses mechanisms of action how serviceindustry agglomeration affects labor productivity, including labor’s availability,intermediate input products and network sharing, trading fee cost savings andoverflow of knowledge and technological, etc. Then Threshold Autoregressive Modelis used for empirical verification, which announces there is prominent threshold effectbetween service industry agglomeration and labor productivity. The threshold valuedivides the service industry convergent level into two standards—the high-level oneand the low-level, two different level of service industry agglomeration producedifferent effect on the production of service industry. The low-level agglomerationwithin the threshold value could promote the labor productivity, while the high-level agglomeration beyond the threshold value could not have the same effect as high asthe low-level. Finally, nonlinear relationship between the agglomeration of the serviceindustry and labor productivity are tested empirically and policy recommendations areproposed in this paper.