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A blessing or curse: the spillover effects of city–county consolidation on local economies

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journal contribution
posted on 25.11.2021, 11:20 by Nanxin Deng, Bo Feng, Mark D. Partridge

Previous studies suggest that ‘city–county consolidation’ has significant positive impacts on urban economic growth. Yet, the specific spillover effects on surrounding rural areas and the overall net impact on larger regions have not been fully investigated. We propose a difference-in-difference framework and find that consolidations have led to a significant loss of per capita gross domestic product (GDP) in nearby rural areas. The backwash mainly comes from the reduction of rural industrial output. We also find that this policy has an insignificant impact at the prefecture level, suggesting such consolidations do not promote aggregate growth and that any gains in urban areas are offset by losses in surrounding rural regions.

Funding

This work was supported by the National Natural Science Foundation of China [grant number 72073045]; the State Key Programme of the National Social Science Fund of China [grant number 21AZD036]; the Fundamental Research Funds for the Central Universities [grant number JKN012022004]; and was sponsored by the Shanghai Pujiang Program [grant number 21PJC029].

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