Does urban spatial structure affect labour income? – research based on 97 cities in China

Abstract

The purpose of the research is that: In the context of China’s rapid urbanisation in recent 20 years, to discuss about how the spatial structure elements such as the size of city, density, pattern and so on influence the staff’s remuneration. Research method: Using American ‘Defense Meteorological Satellite Program’ night-time light data and Land- Scan population distribution data, three urban distance indicators are calculated to quantify the city geometric shape and urban sprawl indices are measured in order to illustrate the urban spatial structure. China Household Finance Survey (CHFS) data from household surveys are also used to investigate how the city shape affects individual wages with method Instrument Variable (IV). When individual characteristics are controlled, we find that a larger population size and a higher density are conducive to higher labour incomes due to agglomeration advantages, while a ‘worse’ city shape is significantly correlated with lower wages, suggesting that the city shape influences urban agglomeration and the mechanisms through TFP of firms prevails. Further discussion shows that urban density matters less for those working in the secondary sector, while the adverse effect of poor urban geometry can be alleviated in cities with a lower density and in those with a larger extension of highways per capita.