Why land urbanization is faster than population urbanization: an explanation of vertical fiscal imbalance

Cai Zhou, Chen Zhang, Ziyun Li and Chao Xu

Applied Economics Letters, 2025, vol. 32, issue 11, 1657-1664

Abstract: Population urbanization is usually faster than land urbanization from the development process of developed countries, but a completely opposite phenomenon has emerged in China. This article attempts to analyse the potential causes of the above-mentioned imbalances from the perspective of vertical fiscal imbalance through fixed effect model. It is found that for every 1% increase in vertical fiscal imbalance, the urbanization imbalance increases by approximately 14.2%, indicating that the phenomenon of population urbanization lagging behind land urbanization is related to the intensification of vertical fiscal imbalance. In addition, there is a threshold effect of vertical fiscal imbalance, and only when vertical fiscal imbalance exceeds the threshold value will it exacerbate the urbanization imbalance. This study is of great significance for the coordinated development of land urbanization and population urbanization in developing countries.

Date: 2025
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DOI: 10.1080/13504851.2024.2310061

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