Producer Service Industry Agglomeration And Regional Wage Differentials

Under the new normal economy, the producer service industry play a pivotal role in the process of upgrading the Chinese economy and improving its performance. However, the producer service industry have different spatial agglomeration degree among each city in our country, and the agglomeration effects has the dynamic characteristic, so the degree of producer services agglomeration and difference between city agglomeration have an uncertain effect on balanced development between regions,then it's difficult to formulate a reasonable policy. Based on this,this paper uses the city level data to examine the impact of producer services agglomeration on regional wage differentials.In theoretical research, firstly, this paper based on the wage equation of new economic geography and draws on the ideas of Crozet and Koenig (2005), Mion and Naticchion (2005) to derive the wage equation that contains the producer service industry agglomeration. Then, it analyzes the transmission mechanism of the impact of producer services agglomeration on wage differentials from two aspects: industry association and industry integration, knowledge spillover and technological innovation. On the one hand, we find that the wage gap between cities will expand because of the difference of producer services agglomeration. On the other hand, the wage gap will narrow due to the existence of positive spatial spillover effect and the leading role of the city center. Therefore, the final trend of wage difference can not be judged, and the further empirical research is needed.In view of the above theoretical analysis, this paper uses the data of the urban level of 2004-2013 in Chinese mainland to make a practical comparison and empirical analysis. The results show that: ?In addition to information transportation, computer services and software industry, the degree of producer services agglomeration is on the rise and the absolute wage gap between cities is widening and the relative wage gap is narrowing.?In addition to the real estate and leasing business services, producer services agglomeration have a positive role in promoting the wage level of the local city,and widen the overall wage gap between cities generally.? Overall,the spatial spillover effects of producer services agglomeration is not significant, and it does not alleviate the wage gap caused by the difference of the city's own producer services agglomeration.However, the spatial feedback effect of some segments of producer services have eased the wage gap between cities.?From the short term,the wage gap between cities are mainly due to the difference of producer services agglomeration; in the long run, wage differences between the cities mainly come from the city's "wage spillovers".?Market openness, human capital, foreign direct investment, capital and market potential and other factors still have significant impacts on the wage gap between regions and regional wage income level. Finally, this paper puts forward five relevant policy recommendations.