Land Use Policy and Employment Growth- Evidence from China

Qiao Wang, Xiuyan Liu, Sam Hak Kan Tang and Cong Du
Additional contact information
Qiao Wang: School of Economics and Management, Southeast University
Xiuyan Liu: School of Economics and Management, Southeast University
Sam Hak Kan Tang: Business School, The University of Western Australia, http://www.web.uwa.edu.au/person/samhakkan.tang
Cong Du: School of Economics and Management, Southeast University

No 21-08, Economics Discussion / Working Papers from The University of Western Australia, Department of Economics

Abstract: This paper examines the causal effect of land use policy on employment growth in Chinese cities. We find that a stricter Floor Area Ratio Regulation (FARR) leads to a reduction in employment growth in Chinese cities- a one standard deviation reduction in FARR leads to a concurrent reduction of employment growth by 1.1-1.6 percentage points. More populated cities and labour-intensive manufacturing industries are found to be more severely affected by stricter FARR. Moreover, the effect of a stricter FARR is found to be less pronounced on state-owned firms compared to foreign-owned and privately-owned firms. Our main conclusions are robust to a variety of sensitivity tests, different instruments and alternative estimators. They suggest that imposing a stricter legal FARR incurs considerable employment costs for Chinese cities.

Keywords: Land Use Policy; Floor Area Ratio Regulation; Employment Growth; Latitude; Earthquake Protection (search for similar items in EconPapers)
JEL-codes: R11 R14 R52 (search for similar items in EconPapers)
Pages: 58
Date: 2021
New Economics Papers: this item is included in nep-cna and nep-ure
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