ABSTRACT
One of the important features of China’s dual economic structure is the existence of a large number of surplus rural labor. When some unexpected factors causes the manufacturers to migrate to an area, they will need a lot of industry labors. The rise in demand will increase the level of real wages in the region, which will lead to workers migrating from other areas into the area, the influx of workers will further increase the demand for industrial products in the area, at the same time, with the increasing number of manufacturers, the price of the product will decline. With further expansion the size of the market and rising real wages, a new round of agglomeration and workers migration will be formed. When agglomeration achieves to a certain degree, the crowding eect will appear, manufacturers’ trend to shift outwards; and too much workers in the area will produce a competitive eect, which will reduce regional wage level. Krugman (1991) established an eective model to explain why economic activity will gather in one place, what time will agglomeration appear, and the mechanism of the agglomeration process evolution. Krugman describes the relationship between wages and working flow, taking the spatial join into consideration.
