Moving to Fiscal Riches? Municipal Government Relocation and Fiscal Revenue Enhancement in Urban China

ABSTRACT Municipal government relocation is a prominent spatial governance strategy in China. Using panel data from 282 prefecture‐level cities between 2000 and 2016, this study employs a multi‐period difference‐in‐differences design to examine its fiscal effects. Relocation significantly increases budgetary revenue only in cities with weaker fiscal capacity, while consistently raising land transfer revenue. Mechanism analyses suggest that relocation promotes firm entry and tertiary‐sector development, with higher land values, rather than expanded land supply, driving land‐related fiscal gains. The effects vary with economic development, industrial structure, urbanization, post‐relocation dynamics, and local leadership. These findings reveal how administrative spatial restructuring shapes local development.