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Are Chinese cities too small?

Au, Chun-Chung and Henderson, J. Vernon (2006) Are Chinese cities too small? Review of Economic Studies, 73 (3). pp. 549-576. ISSN 0034-6527

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Identification Number: 10.1111/j.1467-937X.2006.00387.x

Abstract

This paper models and estimates net urban agglomeration economies for cities. Economic models of cities postulate an inverted U shape of real income per worker against city employment, where the inverted U shifts with industrial composition across the urban hierarchy of cities. This relationship has never been estimated, in part because of data requirements. China has the necessary data and context. We find that urban agglomeration benefits are high—real incomes per worker rise sharply with increases in city size from a low level. They level out nearer the peak and then decline very slowly past the peak. We find that a large fraction of cities in China are undersized due to nationally imposed, strong migration restrictions, resulting in large income losses.

Item Type: Article
Official URL: http://restud.oxfordjournals.org/
Additional Information: © 2006 The Review of Economic Studies Limited
Subjects: G Geography. Anthropology. Recreation > G Geography (General)
H Social Sciences > HB Economic Theory
JEL classification: O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O18 - Regional, Urban, and Rural Analyses
P - Economic Systems > P2 - Socialist Systems and Transitional Economies > P25 - Urban, Rural, and Regional Economics; Housing; Transportation
R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, and Changes
R - Urban, Rural, and Regional Economics > R2 - Household Analysis > R23 - Regional Migration; Regional Labor Markets; Population
Sets: Departments > Geography and Environment
Collections > Economists Online
Date Deposited: 11 Sep 2013 09:14
Last Modified: 11 Sep 2013 09:14
URI: http://eprints.lse.ac.uk/id/eprint/52086

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