Market Access and Individual Wages: Evidence from China

Laura Hering, Sandra Poncet
2010 Review of Economics and Statistics  
We consider the effect of geography on wages using individual data from 56 Chinese cities. We present a simple new economic geography model that links wages to individual characteristics and market access. The latter is calculated as a transport cost weighted sum of surrounding locations' market capacity. After controlling for individual skills and local factor endowments, we find that a significant fraction of the interindividual differences in returns to labor can be explained by the
more » ... ned by the geography of market access. We further find greater wage sensitivity to market access for highly skilled workers and for workers in private and, particularly, foreign-owned firms.
doi:10.1162/rest.2009.11418 fatcat:eljepmjz7valpdvbzyztknfikq