Big Hands Holding Small Hands: Assessing the Impact of Urban‐Rural Integration on Rural Enterprise Growth

ABSTRACT Against the backdrop of China's enduring urban‐rural divide and the national strategy to achieve shared prosperity, this study examines the impact of urban‐rural integration (URI) policies on rural enterprise growth. Using panel data from 1120 counties (2014–2023) and a difference‐in‐differences design, we find that URI implementation is associated with a 12% increase in rural enterprise growth. Mechanism analyses indicate that URI operates through three channels: population mobility, construction land supply, and financial service density—with financial development showing the largest mediating effect. Results also show heterogeneity across regions and sectors: eastern and industry‐specialized counties experience larger effects, while agriculture, transportation, and wholesale trade exhibit more pronounced gains. These findings highlight the importance of addressing regional disparities through tailored, multi‐dimensional policy packages to enhance URI's effectiveness in promoting inclusive and sustainable rural development.