The impact of city-county amalgamations on small administrative units: evidence from land transfer in China

The attitude of small units is crucial to the success of city-county amalgamations. This paper focuses on the impact of amalgamations on small units from the perspective of land transfers. Based on a staggered difference-in-differences model and Chinese micro-level land transaction data, the research finds that city-county amalgamations significantly increase land transfer price and income in small units. The mechanism analysis indicates that city-county amalgamations significantly strengthen investor confidence in newly incorporated districts and improve the marketisation of land transfer methods, both of which contribute to the rise in land transfer prices. The increasing land transfer income provides considerable benefits to small units, enabling them to address the challenges associated with urban development and fiscal expenditure, facilitating the smooth execution of municipal consolidation. Our research elucidates the economic rationale behind city-county amalgamations in emerging countries and extends the consolidation allocation theory by integrating their economic logic into distributive politics.