The author thanks Shihe Fu, Nobuaki Hamaguchi, Noritsugu Nakanishi, Dao-Zhi Zeng, the editor and the anonymous referee for constructive comments. Financial support from the National Natural Science Foundation of China (Grant No. 71303202) and MOE (Ministry of Education in China) Major Project of Humanities and Social Sciences (Grant No. 13JZD010) is gratefully acknowledged.
Occupational Choice and Income Inequalities under Regional Integration†
Article first published online: 2 APR 2014
© 2014 John Wiley & Sons Ltd
Review of Development Economics
Special Issue: Issues in Asia. Guest Editor: Laixun Zhao
Volume 18, Issue 2, pages 313–325, May 2014
How to Cite
Yang, X. (2014), Occupational Choice and Income Inequalities under Regional Integration. Review of Development Economics, 18: 313–325. doi: 10.1111/rode.12086
- Issue published online: 2 APR 2014
- Article first published online: 2 APR 2014
- National Natural Science Foundation of China. Grant Number: 71303202
- MOE (Ministry of Education in China) Major Project of Humanities and Social Sciences. Grant Number: 13JZD010
In a setting with occupational choice and trade between two asymmetric regions, this paper explores the impact of market size and economic integration on both regional inequality and local income inequality within each region. It is shown that market access in a region affects income inequality measures, working through the cutoff productivity for entrepreneurship. Compared with the smaller region, selection into entrepreneurship is more likely for individuals in the larger region with better firm market access whereas the local income inequality is higher. Both regional inequality and regional disparities in the local income inequality measures exhibit an inverted U-shaped pattern when the regional integration level increases.