Gao, Hong, Ming Lu and Hiroshi Sato, 2015, “Inclusive Urban Employment: How Does City Scale Affect Job Opportunities for Different People?” Asian Economic Papers, vol. 14, no. 2, pp. 98-128.
Inclusive Urban Employment:
How Does City Scale Affect Job Opportunities for Different People?*
Hong Gaoa Ming Lub Hiroshi Satoc
a Fudan University, China
b Corresponding author. Shanghai Jiaotong University and Fudan University, China
c Hitotsubashi University, Japan
Abstract: This paper investigates the influence of city scale on employment using data from China. Probit models of employment determination are estimated. The historical population growth during China’s planned economy, when migration was directed by the government and voluntary location choice was prohibited, is used as the instrumental variable of current population size. Instrumental variables estimates show that it is more likely for individuals to gain employment in big cities. A one percent increase in city scale increases one’s employment probability by between 0.044 and 0.050 percentage points. Moreover, the scale advantage of big cities is heterogeneous among individuals with different levels of human capital, with the least-skilled workers benefiting the most.
Key Words: Agglomeration economy; Population; Employment; Human capital
* The authors gratefully acknowledge funding by the National Natural Science Funds (71273055 and 71133004) and the National Social Science Funds (13&ZD015). Financial supports for the 2002 and 2007 CHIP surveys by the Ford Foundation, the National Foundation of Social Sciences of China, SIDA, AusAid, the University of Western Ontario, Beijing Normal University, Hitotsubashi University, the Ontario Research Foundation, and the JSPS (Global COE program and Grants-in-Aid for Scientific Research) are also gratefully acknowledged. This research is also supported by the Fudan Lab for China Development Studies, and the JSPS Grants-in-Aid for Scientific Research No. 24330083. We thank Shihe Fu, Cheryl Xiaoning Long, Guanghua Wan, Wing Thye Woo, Lixin Colin Xu, and conference participants at the 2013 Asian Economic Panel, the 2010 International Symposium on Contemporary Labor Economics, the 2010 Shanghai Workshop of the Ronald Coase Institute, the Sixth Biennial Conference of the Hong Kong Economic Association, the 2012 Conference on Urbanization and Urban Economics Studies in China and the 2012 International Workshop on Regional, Urban and Spatial Economics in China for helpful discussions and comments. All remaining errors are our own.
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