Income allocation and distribution along with high-speed rail development in China

Previous studies have extensively examined the role of high-speed railways in economic growth from the view of economic geography but have largely overlooked their contribution as tech-nological progress to wages and private savings. This study aims to fill this gap by analysing the association between high-speed rail, wages and private deposits in 284 Chinese prefectural-level cities from 2003 to 2018. Utilizing a difference-in-difference method and conducting robustness tests, we examine three potential mechanism channels in this association. Our findings reveal that the introduction of high-speed rail new stations has significantly boosted wage levels through employment effects and financial development effects. However, the opening of the new stations has led to a decrease in private savings. This can be attributed to the marginal absorption of increased wages by higher consumption levels facilitated by high-speed rail development. Additionally, high-speed rail development stimulates private capital investments growth in financial markets. In essence, the technological progress represented by high-speed rail alters residents' traditional investment behavior. Our finding suggests strong heterogeneity across re-gions and significant siphon effects across cities. This paper offers insights into the balanced development of wages and private deposits in China, highlighting the implications of high-speed rail for economic dynamics in the country.