Co-location and spatial wage spillovers in China: The role of foreign ownership and trade

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Colleges, School and Institutes


This paper examines how wages in China are influenced by the interaction and co-location of firms across geographical space. Specifically, and with an emphasis on globally engaged firms and China’s uneven growth across regions we use a spatial econometric approach to estimate the direct and indirect impact of foreign-ownership and export participation on wages. Spatial Durbin Model results reveal an indirect effect of foreign-ownership and exporting on the compensation of workers in co-located firms as well as evidence in support of the standard direct effect that foreign firms, exporters, and firms with a highly educated workforce pay higher wages.


Original languageEnglish
Pages (from-to)629-644
Number of pages16
JournalWorld Development
Early online date22 Oct 2014
Publication statusPublished - Feb 2015


  • wages, FDI, trade, co-location, China, spatial econometrics