Please use this identifier to cite or link to this item: https://hdl.handle.net/1959.11/26832
Title: How New Economic Geography Explains Provincial Wage Disparities: Generalised Methods of Moments Approach
Contributor(s): Hoang, H T (author); Huynh, L T D (author); Chen, G S  (author)orcid 
Publication Date: 2019
Open Access: Yes
DOI: 10.17059/2019-1-16Open Access Link
Handle Link: https://hdl.handle.net/1959.11/26832
Abstract: In recent years, new and promising developments have made new economic geography (NEG) a popular framework for examining the spatial distribution of economic activity around the world. A major NEG prediction is that wages are higher in regions with a large market and easy access to suppliers of intermediate inputs. Based on this principle, we examine this hypothesis by using provincial data in Vietnam. Since the Doi Moi reform in 1986, the Vietnamese economy has successfully transformed from a centrally planned to a market-based economy. The Vietnamese experience has been seen as a valuable case study for other economies in transition. This paper estimates a structural model of NEG using Vietnamese provinces data for the period 2000 - 2012. Using instrumental variables based on the principle of generalised method of moments (GMM), we take account of potential endogeneity problem between regressors. We provide evidence that the industrial linkages and trade costs are statistically significant and quantitatively important in explaining variation in provincial wages. This finding is robust to controlling for a wide range of considerations. Moreover, local governments need to strengthen human capital as the first step towards improving average wages. Indeed, a better education system is not only instrumental to raising average earnings per worker, but also crucial for minimizing income inequality in the long run.
Publication Type: Journal Article
Source of Publication: Ekonomika Regiona, 15(1), p. 205-215
Publisher: Russian Academy of Sciences, Ural Branch, Institute of Economics [Rossiiskaya Akademiya Nauk, Ural'skoe Otdelenie, Institut Ekonomiki]
Place of Publication: Russia
ISSN: 2411-1406
2072-6414
Fields of Research (FoR) 2008: 140218 Urban and Regional Economics
140304 Panel Data Analysis
160505 Economic Development Policy
Fields of Research (FoR) 2020: 440703 Economic development policy
380118 Urban and regional economics
380204 Panel data analysis
Socio-Economic Objective (SEO) 2008: 910101 Balance of Payments
910199 Macroeconomics not elsewhere classified
919999 Economic Framework not elsewhere classified
Socio-Economic Objective (SEO) 2020: 150203 Economic growth
150209 Savings and investments
150201 Balance of payments
Peer Reviewed: Yes
HERDC Category Description: C1 Refereed Article in a Scholarly Journal
Publisher/associated links: http://economyofregion.com/
Appears in Collections:Journal Article
UNE Business School

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