Agglomeration Externalities Impact On Labor Productivity

Since the reform and opening up, China’s economic growth has made remarkable achievements, but accompanied by rapid economic growth, regional differences of labor productivity is growing, which has caused widespread concern, so how to reduce the differences in labor prloductivity has become the piont of discussion, and then studies on labor productivity factors have important theoretical significance,Traditional economic theory say that the main reason of difference among the areas are some endogenous variable factor, such as resource endowments, economic structure, labor resources, production function, due to the microscopic foundation of neoclassical growth theory is based on perfect competition and constant returns to scale, different levels of economic development in the economy will tend to convergence, which cannot provide an explanation to the huge difference and expand.The new economic geography scholars argue that agglomeration externalities is an important factor affecting labor productivity. Therefore, We conduct systematic research on the problem of differences in labor productivity,based on new methods of economic geography and the traditional economic theory.This paper’s basic line is summarizing the domestic and foreign research literatures on agglomeration externalities and labor productivity, discovering that the current results of the research and shortages. Then, the theory of agglomeration externalities and labor productivity theory are sorted out well,the measurement index of agglomeration externalities and factors of labor productivity are also summarized.Third, we complete the empirical analysis,based on the spatial econometric methods with 2003-2012 panel data of 31 provinces,finding the degree of influence of agglomeration externalities on labor productivity. The results show that:(1) During2003-2012, the Influence coefficient of neighboring provinces is 0.148, indicating that spillovers od neighboring provinces has a significant role in promoting.(2) the presence of agglomeration externalities has positive effect on labor productivity,which, monetary externalities exist significant positive role in promoting the productivity of labor, and technological externalities has also promoted, but not significant.(3) the impact of fixed capital investment, human capital, industrial structure, openness on labor productivity is significantly positive, while the impact of fiscal spending is significantly negative.Finally,based on theoretical and empirical researches,we made some policy recommendations,to improve the country’s labor productivity and reduce thet gap among regions.