How Industrial Agglomeration Affects Labor Income

Since the reform and opening-up,Chinese has experienced an increasingly income level and living standard,however,like other economic entity,the income gap between labor groups and areas is inevitably widening.At the same time,agglomerations are arising in economic activities and industries,and present the feature of center-periphery theory of New Economic Geography on areas and countries level.To analyze whether industrial agglomeration affects labor income,this paper conducts a wage determination model based on center-periphery theory of New Economic Geography to form relevant proposition,and makes a further analysis on the influence on labor income from the perspective of industrial gather,trading freedom,capital share.Lastly,this paper applies CHIPS and controls individual features to empirically test the influence on labor income from industrial agglomeration,trading freedom and capital share,so that author can verify the proposition of model mentioned before.This paper analyzes whether industrial agglomeration significantly affects labor income,the main conclusions are as follows:firstly,the agglomeration of manufacturing industry,productive service industry and consuming service industry will significantly affect the labor income.Secondly,freedom of trade positively affects labor income in each industry,which is theoretically consistent with the model,and personal education also positively affect the labor income,meaning that human capital steadily promotes income.Thirdly,even income is deflated by price,it's still positively affected by industrial agglomeration,however,sample from 2007 to 2013 shows that when considering price of real estate to measure life cost,the agglomeration of productive service industry and consuming service industry not significantly affects labor income,or even the influence will turn to negative,which means the rising price of real estate coming from gather is an offset of contribution of gather to labor income.The innovation of this paper lies in wage determination model derived from center-periphery theory of New Economic Geography and the theoretical assumption based on existing study,what's more,paper empirically tests proposition and assumptions,enriching relevant studies on labor income,specifically,paper empirically tests how industrial agglomeration affects industrial labor income,which makes the conclusion more accurate.Of course,the analysis of relationship between industrial agglomeration and labor income can partly explain the gap among areas caused by industrial gather difference,but limited by article space,there is a lack of the specific influence on regional income gap comes from industrial agglomeration,and a further study is still needed.