Structural Transformation and the Urban Growth Shadows: County-Level Evidence from China, 1990–2020

Abstract

This paper investigates whether a location’s growth benefit or suffer from proximity to a big city and explores the underlying mechanisms. Using county-level data from China for 1990–2020, we find that an area’s being close to a big city (in the 150–250 km range) reduces its decadal population growth rate by 2.9–3.5 percentage points, which we call the urban growth shadow effect. Initial agricultural employment share has the strongest power to explain whether the negative effect exists. As the local agricultural employment share declines over time, being proximate to a big city becomes increasingly beneficial. The mechanism is consistent with lower opportunity costs of migration for people employed in agriculture, yet contrasts with core-periphery models that give transport cost a central role.

Keywords: urban growth shadow, spillovers, core-periphery patterns, structural transformation, agriculture