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Political turnover and urban industrial agglomeration

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  • Huang, Yongjian
  • Fan, Youqing
  • Kou, Ying

Abstract

Using hand-collected data from 280 Chinese cities, we find that political turnover significantly enhances urban industrial agglomeration. This result remains valid after a series of robustness and endogeneity tests. The mechanism operates on two fronts: on the supply side, it optimizes industrial structure and increases fixed asset investment intensity; on the demand side, it reduces firms’ perception of economic policy uncertainty while facilitating firm entry. Heterogeneity analyses reveal stronger effects in western and resource-based regions, as well as when newly appointed officials are locally born or female. The agglomeration effect further strengthens following anti-corruption campaigns, particularly under high promotion incentives for incoming officials, and persists for approximately one year. Importantly, however, political turnover also exacerbates regional overinvestment, undermining allocative efficiency.

Suggested Citation

  • Huang, Yongjian & Fan, Youqing & Kou, Ying, 2026. "Political turnover and urban industrial agglomeration," Structural Change and Economic Dynamics, Elsevier, vol. 79(C), pages 166-180.
    • Handle: RePEc:eee:streco:v:79:y:2026:i:c:p:166-180
    DOI: 10.1016/j.strueco.2026.05.003
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