Abstract
Based on the panel data of 268 prefecture-level cities in China during 2001-2007, this paper examines the impact of housing price on the agglomeration of manufacturing industries in China. Using instrumental variable method to alleviate the endogeneity problem, after controlling for a series of city characteristic variables, the IV regression results show that: the housing price has a significant negative impact on the manufacturing agglomeration. Further studies show that the negative effect mainly comes from the eastern region after 2003 when China’s land policy has changed greatly. For the central and western regions, the housing price has no significant effect on the agglomeration.
Highlights
The development of economy is not balanced both within and across countries
Based on the panel data of 268 prefecture-level cities in China during 2001-2007, this paper examines the impact of housing price on the agglomeration of manufacturing industries in China
For the central and western regions, the housing price has no significant effect on the agglomeration
Summary
The development of economy is not balanced both within and across countries. Some researches such as Acemoglu et al (2001) [1] and Redding and Sturm (2008) [2] have attributed the differences of regional economic development to the differences of system, culture or regional advantage. The difference between system and culture is small within a country, but the difference between regional advantages plays a very important role in the development. Fujita and Hu (2001) [3] have studied the regional development of China in 1985-1994. In order to reduce the differences in regional development, the central government of many countries would im-
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