Political turnover and urban industrial agglomeration

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.