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The Relationship between Regional Specialization and Income in Manufacturing Industry

Dong, Jinwoo ORD ID 1 Jung, Hye-Jin 2

1창원시정연구원
2부산대학교

Accredited

ABSTRACT

Regional specialization of manufacturing industry has been attributed to wage gaps across regions. However, it is problematic that previous studies have been disregarded the extent of specialization of manufacturing. To address the limitation, this study measures the degree of specialization in manufacturing by three methods, and analyzes the relationship between regional specialization of manufacturing and wage. Using a panel data of 16 metropolitan areas and provinces from 2007 to 2018, the results from the dynamic panel method indicate that the relationship between specialization and wage varies depending on the measurements of specialization. More specifically, it turns out that absolute specialization and the average firm sizes in specialized industries are positively associated with wage, as specialization can positively affect productivity via rich labor markets and knowledge spillover effects. In contrast, relative specialization is negatively associated with wage, which implies that concentration in particular low-tech manufacturing industries can negatively affect wage. Based on the empirical results, we suggest policy implications.

Citation status

* References for papers published after 2023 are currently being built.