The Double-Edged Effect of Urban Agglomeration on Regional Inequality

Abstract Urban agglomeration, the trend and main carrier of future urbanization in the world, plays an important role in integrating regional resources and promoting economic growth. In particular, in some countries, urban agglomeration has become a policy tool for high-quality urbanization. However, does urban agglomeration play an equally positive role in reducing regional inequality? Based on theoretical analysis and a quasi-natural experiment with the China’s pilot initiative of national urban agglomeration, we confirm that urban agglomeration policy has the reverse effect of exacerbating intra-city inequality and alleviating inter-city inequality in the early stage, with superposition results not significant on overall regional inequality. However, with the passage of policy exposure, the three types of regional inequality indices show inverted U-shaped changes, but the turning point times vary greatly. Further research finds that government intervention for local competition has a time-differentiated moderating effect on the regional inequality effect of urban agglomeration policy. Finally, we provide evidence-based policy recommendations aimed at maximizing policy benefits of urban agglomeration.