Prefectures, ethnic minority autonomous prefectures and leagues are all less urbanized than prefectural cities. Ethnic minority autonomous prefectures and leagues are also dominated by ethnic minority populations. Districts under municipalities are at the prefectural level administratively, even though districts under prefectural cities are at the county level.

To maximise sample size and geographic coverage, our dataset includes 280 of China's 283 prefectural cities, 11 of its 17 prefectures, all 30 of its ethnic minority autonomous prefectures, and all three of its leagues. The three prefectural cities which are excluded are Tianshui City (Gansu Province), Karamay City (Xinjiang), Lhasa City (Tibet). Meanwhile, the excluded prefectures are Ngari, Nagqu, Qamdo, Xigazê, Shannan and Nyingchi (all Tibet). With the exception of Karamay City, which is located in China's remote western region and whose economic structure is heavily biased by dominance of the oil production and refining industry, all of these exclusions are attributable to a lack of data availability. Also included as "prefectures" in our dataset are three of the four municipalities – Beijing, Shanghai and Tianjin – which operate at the provincial level, whilst we divide the fourth municipality – Chongqing – into three regions ("One-Hour Economic Circle", "Northeast wing" and "Southeast wing"). In terms of population and land area, Beijing, Shanghai and Tianjin more closely resemble the larger prefectural cities than they do the 22 provinces. Chongqing Municipality looks more like a small province, hence our division of it into three regions. These three regions correspond to those identified in Chongqing Municipal Government's _Master Plan for Experimental Reform_ (World Bank, 2009).<sup>33</sup> Shihezi City, a county-level city under the direct jurisdiction of Xinjiang Province, also enters our dataset.<sup>34</sup> Our sample size of 331 regions exceeds that of previous studies in the empirical NEG literature which have made use of prefectural level data (Au and Henderson, 2006; Hering and Poncet, 2010a; and Bosker _et al_ ., 2010). This is because these studies have, by and large, restricted themselves to prefectural level cities.

_Variables used in the estimation of the urban and rural wage equations_

**Urban wage rate (** **_w_**<sup>**_U_**</sup> **):** proxied by average disposable income per capita for urban households.  Urban household disposable income is the actual income at the disposal of members of a household which can be used for final consumption, other non-compulsory expenditure and savings.  It is equal to the total income of an urban household minus payments to cover income tax and personal contributions to social security, and the income subsidy received by a sample household for keeping a diary. **Source:** _Regional Economic Statistical Yearbook 2008_ .

Data is missing for 14 prefectures on this variable. These missing values have been filled-in using the predicted values generated from OLS estimation of the regression equation:

> 33 Prior to 1997, Chongqing was a sub-provincial city in Sichuan province.   The area that was added to Chongqing as part of its upgrading to a municipality in 1997 mainly consists of the two wings, i.e. the Northeast and Southeast wings.

> 34 There are 4 county-level cities in Xinjiang that are under the direct jurisdiction of Xinjiang Province. These cities are also called "sub-prefecture-level cities" or "vice-prefecture-level cities"  (http://en.wikipedia.org/wiki/ <u>Sub-prefecture-level_city). Shihezi City is included in our sample because, after Urumqi, it is the second largest</u> city in terms of population in Xinjiang (http://en.wikipedia.org/wiki/Shihezi). It is also the only sub-prefecturelevel city in Xinjiang for which adequate data was available.

34