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Abstract
Food processing has been widely recognized as a traditional, unskilled-labor intensive
production. Yet rapid development in technology drives food processing into more
sophisticated and technology-oriented industry. This paper utilizes a fixed effects model
to test the hypothesis that the food processing industry is a high technology industry. The
research employs a unique natural experiment where some provincial governments in
China liberalized migration policies for highly educated/highly skilled (HEHS) workers.
Theory holds that such labor liberalization policies will increase the level of industrial
agglomeration by high technology firms facing a shortage of talent. The data are the
2001-2010 3-digit industrial and provincial level employment data from the China Labor
Statistical Yearbook. This paper found strong evidence that the HEHS labor pool affected
the location decision of food processing firms in China. The result supports recent
literature that the food and agribusiness sector is increasingly dependent on knowledge
workers and high technology. Other traditional determinants for industrial agglomeration;
scale economies and proximity to markets are also found to promote industrial
agglomeration in the food processing industry.