DP12543 Clustering, Growth, and Inequality in China
|Author(s):||Di Guo, Kun Jiang, Chenggang Xu, Xiyi Yang|
|Publication Date:||December 2017|
|Keyword(s):||China, clustering, Geography, growth and inequality, institutions|
|JEL(s):||D2, H7, O1, R1, R3|
|Programme Areas:||Industrial Organization, International Trade and Regional Economics, Development Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=12543|
This study examines the effects of China's industrial clusters on its economic growth and urban-rural income inequality. A density-based index (DBI) is developed to capture the unique features of such clusters in China. From a county-level DBI panel data constructed based on firm-level and county-level datasets, we find that strong clusters and entrepreneurial clusters substantially enhance economic growth. Moreover, entrepreneurial clusters reduce urban-rural income inequality by increasing the income of rural residents. Identification issues are carefully addressed by deploying an instrumental variable approach.