The Impact Of Economic Agglomeration On Labor Productivity

Since the reform and opening up,with the continuous advancement of my country’s urbanization process,the level of urbanization has continued to improve,the urban economy has continued to develop,and the phenomenon of economic agglomeration has become increasingly prominent.At the same time,the infrastructure has been continuously improved,and the talent introduction policy has been continuously introduced,which has increased the urban labor force.Demand has also increased urban labor productivity and facilitated the further agglomeration of the urban economy.It is worth asking what is the impact of urban economic agglomeration on labor productivity? As my country has obvious geographical advantages,is there still regional heterogeneity in the impact of economic agglomeration on labor productivity? In addition,do infrastructure and human capital affect economic agglomeration and increase labor productivity?Regarding the study of the relationship between economic agglomeration and labor productivity,some scholars discussed the external effects of economic agglomeration on labor productivity,and some scholars discussed the impact of economic agglomeration on labor productivity after adding economic facilities or human capital factors.The results of the study consistently show that economic agglomeration promotes the increase of labor productivity.On this basis,this paper studies the impact of economic agglomeration,infrastructure and human capital on urban labor productivity from the city level.The research content of this article mainly includes: Firstly,to review the domestic and foreign research on economic agglomeration and labor productivity,and to clarify the results and shortcomings of the current research.Secondly,by referring to the theoretical analysis and model setting of the existing literature,this article selects Empirical research on the panel data of 223 prefecture-level cities across the country from 2003 to 2015.The 223 prefecture-level cities are further divided into eastern,central,and western regions to discuss the degree of economic density,human capital,and infrastructure’s influence on labor productivity.Finally,the empirical results show that economic density,human capital,and infrastructure all play a significant role in promoting labor productivity.Specifically,Firstly,This article conducts mixed OLS regression,fixed effects regression,and random effects regression.The regression results show that economic density,human capital,and infrastructure all have a positive impact on labor productivity.In addition,the LSDV method,LM test,and Hausman test are used to determine the choice of the model,and the test concludes that a fixed-effect model should be used.Secondly,introduce instrumental variables and perform two-stage least squares(2SLS)regression.The results show that economic density,human capital,and infrastructure all have a positive impact on labor productivity.Thirdly,test the robustness of the model by changing the sample interval,change the variable interval from the whole country to the eastern region,central region and western region,conduct mixed OLS regression,fixed effects regression and random effects regression,use the LSDV method,LM test,and Hausman test to determine the choice of the model.The results all show that the fixed effects regression model should be used,and economic density,human capital,and infrastructure promote the increase of labor productivity.The robustness of the model is thus confirmed.Furthermore,comparing the empirical results of various regions,we find that the economic density,human capital,and infrastructure in the western region all have a higher degree of influence on labor productivity than other regions.This shows that the economic density,human capital,and infrastructure in the western region have more obvious effects on promoting labor productivity.Based on the above research,this article puts forward the following suggestions:First,in view of the significant positive impact of economic agglomeration on labor productivity,China should continue to promote urbanization,rationally guide industrial economic agglomeration,guide qualified areas to form urban agglomerations,and improve household registration system,relax the barriers of urban access,guide the rational flow of capital and labor,and give full play to the external effects and scale effects brought by economic agglomeration,thereby driving the continuous economic growth and further improving labor productivity.Second,in view of the significant positive impact of human capital on labor productivity,it is necessary to continue to increase investment in education,build a group of capable and effective teachers,guide the construction of a group of high-quality colleges,transform "demographic dividend" into "talent dividend",rationally regulate the flow of talents,promote the reform of the personnel system,improve the talent incentive mechanism and the talent market service system,and guide the flow of talents to the grassroots,to the countryside,to backward areas,and to poor areas,to promote the rational flow of talents between urban and rural areas and between regions,realize the optimal allocation of talents,encourage talents studying abroad to return to the country,and also do a good job in introducing high-level foreign talents to work in China.Third,in view of the significant positive impact of infrastructure on labor productivity,it is necessary to increase investment in areas with underdeveloped infrastructure,continue to adhere to the western development strategy,increase investment in infrastructure construction in the western region,and promote economic development in the western region.At the same time,focus on rural areas with underdeveloped infrastructure,improve the construction of rural transportation facilities,do a good job in the construction of farmland water conservancy,implement rural safe water projects,and further tap potential rural labor;deepen the reform of the investment system,promote the diversification of investment entities,and encourage social capital to participate in infrastructure construction through joint ventures,financing etc.And introduce social funds in the field of infrastructure construction,give play to the power of the market,and form and improve a new infrastructure construction system led by the government and invested by the society.