Urbanization and Rural Development in the People’s Republic of China

This chapter studies how urbanization enhances economic growth. Through agglomeration effects, employment opportunities and income levels can largely increase. In addition, the mechanism of sharing, matching, and learning are greatly strengthened in cities, especially large cities, which can further bring exchange of information, knowledge spillover and human capital externalities. However, when taking a close look at the urbanization level, speed, and regional variations, we see that the PRC’s urbanization level lags behind that of many developing countries at a similar developing stage. Problems of urbanization, including below average urbanization level and urbanization lagging behind industrialization, need to be solved by institutional reforms for sustainable development.

Dynamic agglomeration economies and learning by working in specialised regions

This study provides new evidence on the magnitude of dynamic agglomeration economies. It estimates the elasticity of entry wage with regard to the size of the regional labour markets in which previous work experience was acquired and considers, furthermore, the workforce compositions in these regions. The results indicate that not only the sheer size of regional labour markets determine individual knowledge accumulation. Benefits from acquiring experience in large labour markets by workers in service sector occupations are partly caused by human capital externalities, whereas manufacturing workers experience additional dynamic gains from localisation economies, in Germany particularly outside urban centres.