Two‐stage development, allocation strategies' effect, and industrial land policies' adjustment, China

Abstract

AbstractLocal governments are faced with ‘financial’ and ‘political’ double‐pressure to attract business investment with the low‐price industrial land in China. This study tests the effect of industrial land allocation strategy on local tax and employment using the Driscoll‐Kraay (D‐K) standard error fixed‐effect model in different stages. The empirical results indicate that the taxation and employment‐pulling effects are still effective in the full‐sample model. However, in the stage of rapid economic development (2007–2012), the interaction term coefficient between industrial land scale and price is –0.026 and is significant at 5% level. This result suggests that the low‐price and large‐scale industrial land allocation strategies of local governments have a significant impact on the tax. For every 1% decrease in industrial land price, the regional employment growth is 0.071%. In the structure transformation stage (2013–2019), the industrial land scale can influence increasing local taxation. The effectiveness of local government industrial land allocation strategy on regional employment is weakened.