Research On The Effects Of Market Transition On Urban Agglomeration Economies In China

International experience and China’s practice indicate that efficient and inclusive urbanization is crucial to addressing development’s imbalances and inadequacies.Over the past forty years,China’s urbanization has been rapid.Meanwhile,however,there are many conflicts and problems in this process,such as dual division.Local governments use Hukou to restrict migrants flowing to cities;meanwhile,local governments use some policies to discriminate against immigrants.These policies lead to population urbanization lagging behind industrialization,the urban-rural gap,and the social division between the native and immigrants in cities.Urban agglomeration economy is the engine of modern cities’ development.But,why does China restrict the inflow of immigrants and the size of cities?The leading view is that immigrants bring negative a negative shock to the native’s labor market and public service.This view emphasizes the push force,but ignores the pull force generated by population concentration in cities:why doesn’t population concentration generate enough large economic gains to make local government and the native accept immigrants?The leading theory of urban agglomeration arises from the experience of cities in developed countries with mature market economy system,but China is still in the transition process from planned economy system to market economy system over the past 40 years.Urban agglomeration economies need a proper institutional environment.Invisible environments,such as incentives and organization in cities,affect the people’s communication and interaction,and then the strength of urban agglomeration economies given the agglomeration pattern.To understand the effect of market transition on urban agglomeration economies helps us to deeply understand the conditions under which urban agglomeration economies generate,why the restrictive and discriminative polies emerge and sustain,and how to deal with the problems which arise from weakening or abolishing the Hukou system.This study explores the effects of marketization transition on urban agglomeration economies and related channels.Using theoretical models and empirical investigation,this study has several results.First,the level of marketization has a significantly positive impact on urban agglomeration,i.e.,the higher the level of marketization is,the larger employment density elasticity of labor productivity is.Second,the stronger market force makes local government raises the quality of infrastructure,and then raise the urban agglomeration economies.Third,the improvement of marketization level raises the urban agglomeration economies generated by the natives,and the external economies for the native generated by immigrants.The latter suggests that deepening marketization reform can weaken the division in cities induced by the Hukou policy.Forth,market transition inhibits the effect of urban agglomeration on technological innovation,since urban concentration may have a negative effect on resources for technological innovation when the level of economic development is low.At a low development level,there is a tradeoff between urban agglomeration and technological innovation.For the conflicts in the urbanization process,the main policy implication is as follows.First,decision-makers should place the city diseases into the dynamic process of transition,and not simply view the inflow of migrants as a scourge.Second,to resolve the conflicts,decision-maker should deepen market reform rather than implement restrictive and discriminative polices.The former can strengthen urban agglomeration and generate long-term benefits,and the latter may be effective in the short run,but have a great harm in the long run.The possible innovation includes the following aspects.Theoretically,this study investigates the institution basement of urban agglomeration economies,and deepens the understanding about the conditions under which urban agglomeration economies form.Empirically,this study uses novel econometric methods to make research conclusions more reliable,such as dynamic panel threshold model,and manually collects patent data at city level.There are still some deficiencies in the study.For example,the mechanisms and paths through which market transition affects urban agglomeration need to be refined;and the data about migrant workers and technological innovation needs to be improved.