Exploring the effect of industrial agglomeration on income inequality in China

Income inequality is a good indicator reflecting the quality of people's livelihood. There are many studies on the determinants of income inequality. However, few have studied the impacts of industrial agglomeration on income inequality, and even fewer have studied the spatial correlation of income inequality. The goal of this paper is to investigate the impact of China’s industrial agglomeration on income inequality from a spatial perspective. Using data on China’s 31 provinces from 2003 to 2020 and the spatial panel Durbin model, our results show that industrial agglomeration and income inequality present an inverted “U-shape” relationship, proving that they are non-linear changes. As the degree of industrial agglomeration increases, income inequality will rise; after it reaches a certain value, income inequality will drop. Therefore, the Chinese government and enterprises had better pay attention to the spatial distribution of industrial agglomeration, thereby reducing China's regional income inequality.

Methods
These data originate from the 2004–2021 China Statistical Yearbook, China Labour Statistical Yearbook and China Population and Employment Statistics Yearbook.

Using data on China's 31 provinces from 2003 to 2020, the spatial panel Durbin model is adopted to explore the impact of industrial agglomeration on income inequality in China.