The Nonlinear Impact of Land Price Distortion on Common Prosperity: Evidence from China

Abstract

Land, as an essential resource to support economic and social development, is a key element affecting the process of common prosperity in China. Existing literature confirms that land price distortion significantly impacts the urban-rural income gap, economic growth and urbanization. However, the impact and mechanisms of land price distortion on common prosperity are still unclear. This paper explores the above issues based on the panel data of 30 provincial administrative regions in China from 2006 to 2020. The results find that the relationship between land price distortion and common prosperity is “inverted U-shaped”. Further analysis shows regional heterogeneity in the influence of land price distortion on common prosperity. Specifically, the eastern region has the above “inverted U-shaped” relationship between land price distortion and common prosperity, which is absent in the central, western, and northeastern areas. The mechanism analysis confirms the mediatory effects of population urbanization and housing price in the influence process. This paper provides policy recommendations for the government to rationally and effectively utilize land resources and achieve the goal of common prosperity.