The Spillover effect of government relocations on economic growth in Chinese cities

This paper investigates the spillover effect of government locations on economic growth by exploring more than 180 relocation events of city governments in China. Empirical results demonstrate that government relocations improve regional economic growth measured by night lights. This positive effect decreases with the distance to city governments’ new locations. Government relocations are also found to accelerate urbanization. Potential mechanisms include the changes in land conversion and firm birth patterns in the move-in areas. These results indicate that the relocation of local governments can be an effective place-based policy to improve economic growth and urbanization.