Agglomeration Economies in China: Locations and Effects

The nature and location of urbanization economies and their effects on productivity per worker in China are examined. Unlike previous studies, more accurate resident-based measures of urban scale from the 2010 census are used. The size of urbanization economies is similar to those in other countries and they occur only in bigger cities and not in smaller towns, and operate only through tertiary sector activity. Efforts by government to disperse urbanization, through land use and migration restrictions and by stimulating construction and manufacturing in China’s counties, are unlikely to create beneficial agglomeration effects.