Megaregion Enlargement and the Geography of Gains: Evidence from the Yangtze River Delta

This paper asks how enlarging a megaregion reshapes the geography of gains. We study the Yangtze River Delta’s discrete enlargement in 2013, which widened and deepened governance-led integration. The central question is not only whether enlargement raises aggregate performance, but who benefits—incumbent core members, newly admitted entrants, or nearby non-members just outside the boundary.

We use the Synthetic Control Method (SCM) to construct city-specific counterfactuals and pair it with event-time analysis designed to be robust to spillovers. This approach is particularly useful in settings with heterogeneous treatment effects and plausible spatial interference, where standard DID averages can obscure distributional consequences.

Summary and Contribution:

We make three contributions. First, we quantify the incidence of enlargement across incumbents, 2013 entrants, and neighboring non-members, providing a unified assessment of within-boundary gains and cross-boundary spillovers. Second, we open the mechanism box using city-level indices of capital and labor misallocation and an industrial-structure advancement index, linking output gains to reallocation and structural change. Third, we translate the evidence into policy implications: enlargement is not automatically “more is better” without complementary tools that relax mobility, housing, and skills constraints at the periphery.

Evidence:

Relative to synthetic counterfactuals, GDP per-capita growth increases strongly for incumbent members (≈ 1.6 pp/year on average after 2013) and more modestly for 2013 entrants (≈ 0.5 pp/year), while neighboring non-members experience weakly negative effects (≈ −0.4 pp/year). Mechanism results show that capital misallocation falls and industrial upgrading strengthens within the enlarged boundary, while labor misallocation declines mainly for incumbents, consistent with slower labor adjustment in the presence of mobility and settlement frictions. Overall, the evidence supports a “Winner-Takes-More” pattern inside the boundary with limited positive spillovers across it.

Availability:

The manuscript is not hosted on this website due to copyright considerations.