The double-edged impact of inclusive urban land redevelopment in China: Welfare gains and urban disparities

This study investigates the distributional welfare effects of inclusive Urban Land Redevelopment (ULR) under China’s New-Type Urbanization Plan (NTUP). Constructing a novel Spatial Human Development Index (SHDI) for 279 cities (2010–2020) and integrating micro-level migrant data, we employ System GMM and triple-difference models to uncover a trade-off between aggregate development and spatial equity. We find that the post-2014 policy shift successfully reversed the welfare-reducing effects of earlier ULR, generating aggregate gains. However, these benefits are structurally asymmetric. Developed cities leverage superior institutional capacity to convert industrial and public-service redevelopment into welfare improvements, whereas less-developed cities realize limited returns despite substantial migration inflows. Micro-level analysis reveals that ULR drives skill-differentiated sorting. In developed cities, ULR significantly increases the retention of low-skilled labor while compressing high-skilled wage premiums, thereby narrowing within-city inequality. Conversely, it exacerbates between-city disparities by triggering an outflow of high-skilled workers from less-developed areas. These findings demonstrate that ULR enhances aggregate efficiency while widening regional disparities, necessitating differentiated strategies that pair physical redevelopment with institutional strengthening in lagging regions.