Agglomeration Shadows amid China’s Urbanization: From a High-Speed Railway Perspective

Zhang Jing (张晶)1 and Chen Haishan (陈海山)2*

1 School of Economics, Xiamen University, Xiamen, China

2Dongbei University of Finance & Economics, Liaoning, China

Abstract: Using China’s county-level panel data of 2007-2016, this paper verifies the existence of agglomeration shadows from an infrastructure development perspective. With high-speed railway (HSR) launch as a quasi-natural experiment, we find that the launch of HSR lines was followed by a decrease in GDP per capita of counties along the route by 2.6 percentage points. This conclusion remains valid after a series of robustness tests and the treatment of potential endogeneity problem. Mechanism analysis suggests that such effect is the most significant for counties within a distance of 97 to 195 km to the nearest central city, which is a manifestation of the “agglomeration shadows.” We also uncover that HSR would spur economic growth for counties with favorable endowments. However, HSR also has a significant negative impact on permanent population in counties. When change in permanent population is taken into account, HSR’s negative impact on the countywide economy becomes smaller. Shrinking permanent population in counties after HSR launch is a manifestation of such agglomeration shadows. HSR has facilitated the free flow of population. These findings point to the possibility that HSR may have induced regional economic equilibrium amid agglomeration.

Keywords: Urbanization, high-speed railway launch, agglomeration shadows, regional equilibrium

JEL Classification Code: O11, R11, H54

DOI: 10.19602/j.chinaeconomist.2022.09.07

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