Agglomeration and centralization: The multidimensional impact of the Internet on the spatial structure of urban employment in China

This study deconstructs the multidimensional impact of the Internet on the spatial structure of urban employment in China from the dual perspectives of agglomeration and centralization. Using microdata from 27.21 million enterprises from the China Economic Census of 2004, 2008 and 2013, we find that (i) on average, the Internet promotes the evolution of the urban employment space to a hierarchical agglomeration structure by generating agglomeration and centralization effects; (ii) in terms of the underlying mechanisms, the Internet generates agglomeration effects by increasing knowledge intensity within cities and centralization effects by promoting the development of industries that rely on the strengths of main centers; (iii) as Internet penetration increases, the agglomeration effects of the Internet exhibit a “marginal diminishing” trend, whereas the centralization effects show no statistically detectable nonlinear pattern; and (iv) the Internet propels the employment space of knowledge-intensive and high value-added services toward a hierarchical monocentric structure, whereas the employment space of resource- and land-intensive industries tends to evolve into a polycentric networked structure.