Inter-city Factor Reallocation:Structural Transformation and Growth in a Spatial General Equilibrium Analysis
The Chinese economy currently faces the challenges of promoting consumption,adjusting its structure,and fostering growth.Gaining a thorough understanding of the structural transformation in the new development stage is a prerequisite for simultaneously addressing these tasks.As China's productivity and per capita income increase,the role of the service sector in employment,GDP,and consumption continues to grow,aligning with the trajectory of economic de-velopment.However,compared to developed countries at similar historical stages,China has experienced relatively low levels of employment and value-added in the service sector over the past decade,with a difference of approximately 10 percentage points.This inadequate development of the service sector has resulted in insufficient consumer demand and di-minished welfare for the people,thus highlighting unbalanced and inadequate economic development in China.In a large country,the optimization of resource allocation plays a vital role in promoting consumption,adjusting the structure,and driving growth.Previous research has frequently neglected the impact of spatial factors on consumption,structure,and growth.However,it is crucial to acknowledge the interconnection between industrial structure and spatial ar-rangement.Notably,the service sector has experienced more remarkable development in larger cities than in smaller ones.Therefore,facilitating intercity circulation and optimizing spatial structure and agglomeration effects offer significant ad-vantages in enhancing resource allocation efficiency,promoting structural transformation,and fostering economic growth.However,in the past period,urbanization and land policies in China have imposed various restrictions on the devel-opment of large cities,leading to an inefficient or mismatched spatial allocation of factors of production among cities.As a result,the proportion of the population residing in China's major cities is significantly lower than that in developed countries at similar historical stages.The mismatch of factors of production serves as a crucial determinant that explains the disparities in productivity and per capita GDP between countries and regions.In the case of China,it also grapples with a significant spatial mis-match of factors of production.However,existing research rarely combines labor migration,land supply policies,and the structural transformation from non-service sectors to the service sector.This study aims to bridge this gap by incorporat-ing the impacts of labor migration barriers and land supply policies into the analysis of structural transformation.Through the construction of a spatial general equilibrium model that encompasses two sectors and multiple regions,this study quantitatively examines the effects of spatially inefficient factor allocation among cities on the development of the service sector,economic growth,and balanced regional development.Our model is based on two fundamental assumptions.We first consider non-homothetic preferences,which imply a higher income elasticity of demand for services.As a result,larger cities with higher income levels exhibit increased demand for service consumption.Then,we account for productiv-ity disparities between sectors across different cities,with larger cities enjoying advantages in service sector productivity.These factors collectively contribute to a higher proportion of the service sector in larger cities.Our calibrated model can well fit the main features of China's urban development.The quantitative analysis indi-cates the following results.(1)Reducing barriers to labor migration to large cities(by approximately 25％)can increase the share of services in total GDP and employment by 2 percentage points,while reducing inter-city income disparity by 7.3％,increasing total GDP by 7％,and improving social welfare by 7％.(2)Increasing land supply share in large cities to its highest level in the sample period can raise the share of services in employment and GDP by 1 percentage point,and increase total GDP and social welfare by 3％.(3)Simultaneously increasing the land supply in large cities and facilitating the labor flow to these cities will generate larger growth,structural,output,and social welfare gains.(4)As income level increases,the service sector has greater potential,so the structural dividend and social welfare improvement effect re-leased by relaxing factor constraints on large cities will be greater.The policy implication of this paper is that,in the new development stage,the potential of large cities for improving social welfare and growth is becoming increasingly important.By addressing the institutional issues related to regional re-source allocation,China can better leverage domestic circulation,promote high-quality growth and achieve inter-regional balance.
Barriers to Labor MigrationSpatial Allocation of LandStructural TransformationEconomic GrowthInter-city Factor Reallocation
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NSTL
万方数据
