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City size and urban labor productivity in China: New evidence from spatial city-level panel data analysis
Authors:Jie Chen  Qian Zhou
Institution:1. School of Public Economics and Administration & Institute of Advanced Research, Shanghai University of Finance and Economics, China;2. Institute of Free Trade Zone & School of Shanghai Development, Shanghai University of Finance and Economics, China
Abstract:The previous literature has generally found that most Chinese cities were undersized in the 1990s. However, little is known about how urban agglomeration in China has evolved since the country began to experience much faster urbanization and deep marketization after 2000. Based on panel data of 281 cities between 2000 and 2013, our spatial panel data regression results show that the scale impact of city size on urban productivity appears to have an inverted U shape, and its effect will grow when the cities’ industrial structure becomes more dominated by the service sector. There are also significant spatial interactions and spatial heterogeneity of urban agglomeration among Chinese cities. Furthermore, we compute the optimal size for each city and find that most Chinese cities are still undersized in recent years. Based on our findings, we argue that the Chinese government should focus on promoting sufficient growth of medium sized cities in its new urbanization strategy.
Keywords:R12  J21  City size  Industrial structure  Labor productivity  Spatial panel model
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