The Impact of City-County Mergers: Evidence from Sichuan Province

Justin T. Callais and Linan Peng

Chinese Economy, 2025, vol. 58, issue 4, 317-344

Abstract: Municipal mergers are often used to facilitate regional economic development. City-county mergers (CCM) are a form of municipal merger and one of the administrative division adjustment methods adopted by prefecture-level city governments to accelerate regional economic developments in China. Most studies of CCMs have focused on the economic effects of CCMs on prefecture-level cities, and little attention has been paid to the county-level effects post-merger. In this paper, we use the Synthetic Control Method (SCM) to examine the effect of the CCM of Nanxi district (formerly Nanxi county) in Sichuan province. We find that after the CCM, GDP per capita was 1989 yuan higher in 2017 than predicted. We also find that the structure of the local economy was altered toward a more industrialized economy, with a decrease in service and agricultural shares (although only significantly for the industrial and service). There is also evidence that these findings were driven by a larger portion of the local economy that was from private markets, suggesting these reforms incentivized larger private production.

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:mes:chinec:v:58:y:2025:i:4:p:317-344

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DOI: 10.1080/10971475.2024.2408072

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