Trade shocks and urbanization: evidence from county-level data in China

Shuo Chen; Yiran Li; Xuanyi Wang

doi:10.1080/13504851.2023.2208837

Trade shocks and urbanization: evidence from county-level data in China

Shuo Chen, Yiran Li^*, Xuanyi Wang

^*Corresponding author for this work

Research output: Contribution to journal › Journal article › peer-review

Abstract

Recent research has concluded that foreign trade is a key factor shaping the urbanization process in developing countries. Yet the empirical evidence is still in its infancy. This paper seeks to fill this gap by using the Financial Crisis of 2008 as a quasi-experiment to examine how trade shocks have affected urbanization in China. We find that such shocks have reduced the change in the urbanization rate by 0.4%. These results are robust after controlling for other factors that affect urbanization. We explore the underlying mechanisms and find that trade shocks reduce the urban – rural income gap by lowering the income of urban residents and slowing down the urbanization process.

Original language	English
Pages (from-to)	1987–1996
Number of pages	10
Journal	Applied Economics Letters
Volume	31
Issue number	19
Early online date	4 May 2023
DOIs	https://doi.org/10.1080/13504851.2023.2208837
Publication status	E-pub ahead of print - 4 May 2023

Scopus Subject Areas

Economics and Econometrics

User-Defined Keywords

China
Foreign trade
financial crisis
urbanization

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This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1080/13504851.2023.2208837

Cite this

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title = "Trade shocks and urbanization: evidence from county-level data in China",

abstract = "Recent research has concluded that foreign trade is a key factor shaping the urbanization process in developing countries. Yet the empirical evidence is still in its infancy. This paper seeks to fill this gap by using the Financial Crisis of 2008 as a quasi-experiment to examine how trade shocks have affected urbanization in China. We find that such shocks have reduced the change in the urbanization rate by 0.4%. These results are robust after controlling for other factors that affect urbanization. We explore the underlying mechanisms and find that trade shocks reduce the urban – rural income gap by lowering the income of urban residents and slowing down the urbanization process.",

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N1 - Funding Information: This work was supported by the National Natural Science Foundation of China (71303059), and Innovation Program of Shanghai Municipal Education Commission (2017-01-07-00-07-E00002). We alone are responsible for any remaining errors. Publisher copyright: © 2023 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group.

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N2 - Recent research has concluded that foreign trade is a key factor shaping the urbanization process in developing countries. Yet the empirical evidence is still in its infancy. This paper seeks to fill this gap by using the Financial Crisis of 2008 as a quasi-experiment to examine how trade shocks have affected urbanization in China. We find that such shocks have reduced the change in the urbanization rate by 0.4%. These results are robust after controlling for other factors that affect urbanization. We explore the underlying mechanisms and find that trade shocks reduce the urban – rural income gap by lowering the income of urban residents and slowing down the urbanization process.

AB - Recent research has concluded that foreign trade is a key factor shaping the urbanization process in developing countries. Yet the empirical evidence is still in its infancy. This paper seeks to fill this gap by using the Financial Crisis of 2008 as a quasi-experiment to examine how trade shocks have affected urbanization in China. We find that such shocks have reduced the change in the urbanization rate by 0.4%. These results are robust after controlling for other factors that affect urbanization. We explore the underlying mechanisms and find that trade shocks reduce the urban – rural income gap by lowering the income of urban residents and slowing down the urbanization process.

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DO - 10.1080/13504851.2023.2208837

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Trade shocks and urbanization: evidence from county-level data in China

Abstract

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