The effect of local agglomeration on skill upgrading: an empirical study on prefecture-level cities in mainland China

Authors: Huangsheng Zhu, Faculty of Geographical Science, Beijing Normal University, Shiyang Li*, Faculty of Geographical Science, Beijing Normal University
Topics: Economic Geography, Quantitative Methods, Urban Geography
Keywords: industrial agglomeration; specialization; diversity; skill upgrading; externalities;
Session Type: Paper
Day: 4/7/2019
Start / End Time: 9:55 AM / 11:35 AM
Room: Balcony A, Marriott, Mezzanine Level
Presentation File: No File Uploaded


With the gradual disappearance of China's demographic dividend, the issue of skill upgrading is increasingly prominent. In the context of globalization, industrial upgrading in developing countries may not bring about skill upgrading which usually come with certain spatial heterogeneity. Therefore, it possibly implies the correlation between upgrading of labor skills and local characteristics. Based on it, this paper puts forward the agglomeration effect hypothesis of the impact of labor skills upgrading. According to a regression analysis by using China's prefectural level panel data in 2005-2015, we explore the agglomeration externalities, including specialization and diversification, to skills upgrading and further analyze the heterogeneity of these externalities within urban population and economic scale, geographical characteristics and the industrial type. The results show that, firstly, the effect of specialization plays an important role in promoting the upgrading of labor skills, while the diversification effect may have a "threshold effect", resulting with more complexity and uncertainty. Secondly, the direction and mode of the influences from local agglomeration on skill upgrading significantly varied among regions and industries, which shows a more significant positive effect in developed cities, coastal areas and big cities. Thirdly, in China, the positive effect of manufacturing agglomeration on the upgrading of labor skills is the specialization externality, while the service industry agglomeration mainly promotes the upgrading of regional labor skills through diversified externality.

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