Local Public Service Provision and Spatial Inequality in Chinese Cities

We study spatial inequality in access to local public services between low-income and high-income households in Chinese cities. We examine the extent to which such inequality is exacerbated by residential sorting with respect to household income that makes neighborhoods with better access to scarce public-service resources more exclusive. Evidence based on cross-city regression analysis indicates increased spatial inequality due to income sorting where public-service resources are scarcer and income sorting is easier. Thus additional provision of public-service resources is found to benefit low-income households more than high-income households as a result of reduced spatial inequality. The housing supply conditions that facilitate income sorting are found to help the rich at the expanse of the poor in taking advantage of local public service resources.