How Has Land Restriction Policy Influenced Green Total Factor Productivity? Evidence from Chinese Cities

In 2014, China implemented a policy to limit land supply for new industrial construction in city centers with more than 5 million people to decrease the pollution of urban areas caused by industrialization. We aimed to study whether this land restriction policy (LRP) has been conducive to enhancing urban green total factor productivity (GTFP) with the goal of achieving long-term sustainable urban development. We formulated our hypotheses based on theoretical analysis. We used the difference-in-differences method and the data from prefecture-level cities from 1999 to 2017 for verification. The findings indicate that the LRP has improved the urban GTFP via (1) increasing the allocation efficiency of land transfer; (2) increasing land prices and transforming the industrial structure to tertiary industry; and (3) decreasing newly built firms, investments, patents for inventions, and technological innovation. Consequently, a selected land policy favoring green industry is required to prevent urban deindustrialization and to support the sustainable industrial development of the urban economy throughout the low-carbon transition.