Agglomeration And Wage Growth

In the process of urbanization in China,whether economic agglomeration will have an important impact on urban wage level is a very worthwhile question to study.This paper comprehensively considers the specific adjustment made by the government to the land supply in the eastern region after 2003 and the existing influence of the viscous household registration system,and explores how the level of urban economic agglomeration affects the wage level of the city.We further study this issue by examining the interaction between economic agglomeration and human capital,economic agglomeration and infrastructure.Using panel data of 11 provinces and municipalities directly under the Central Government in eastern China from 2003 to 2010,this paper empirically examines the relationship between economic density and wage level.The empirical results show that the urban wage level significantly benefits from economic density during the sample period.The interaction between economic density and human capital has a significant positive impact on urban wage growth.The interaction between economic density and infrastructure also has a significant positive impact on urban wage growth.Specifically,this paper examines the relationship between economic density and wage level through static panel model and dynamic panel model.At the same time,we try to deal with endogenous problems in the model by depending on reliable instrumental variables.On this basis,we also introduce the interaction terms of economic density and human capital,economic density and infrastructure respectively in the model,and examine the impact of the interaction between economic density and human capital on urban wage level,as well as the interaction between economic density and infrastructure on urban wage level.In the empirical analysis of the influence of economic density on urban wage level,this paper uses mixed regression,fixed effect,random effect,2SLS,SYS-GMM and DIF-GMM to estimate that the coefficients between economic density and wage level are significantly positive at the level of 5%.In the robustness test section,using industrial enterprise density instead of passenger density to measure economic density,we only estimate the mixed regression,fixed effect and random effect on static panel model.The coefficient between economic density and wage level is mostly positive at 1% level.By constructing the interaction terms of economic density and human capital,we use fixed effect,SYS-GMM and DIF-GMM to estimate.The results show that the interaction between economic density and human capital will have a positive impact on the urban wage level,and pass the robustness test.By constructing the interaction terms of economic density and infrastructure,we use mixed regression,fixed effect,SYS-GMM and DIF-GMM to estimate.The results show that the interaction between urban economic density and infrastructure will also have a positive impact on the urban wage level,and pass the robustness test.The research shows that economic agglomeration significantly promotes the rise of urban wage level,and increases the impact of human capital on urban wage growth.At the same time,the effect of economic agglomeration on wage growth will be enhanced with the improvement of infrastructure.Therefore,considering the existing impact of the household registration system,in order to better play the positive role of economic agglomeration in promoting urban wage growth,it is necessary to further standardize the land supply of urban,prevent urban disorderly expansion and low-density development,and ensure the necessary level of urban economic agglomeration.Secondly,we should deepen the educational reform,increase the investment of urban education funds,promote the accumulation of urban human capital,and make it a favorable factor for the growth of urban wage;at the same time,we should pay attention to the exchange and interaction between urban human capital,improve the impact of human capital externality,and promote the improvement of urban labor productivity and wage growth.Finally,improving infrastructure is a necessary part of urbanization development in China,and infrastructure is the basis of realizing urban agglomeration economy in China;coordinating the relationship between infrastructure and existing economic agglomeration level to ensure that they can play a greater driving force in the process of urban development.