Impact of new-type urbanization pilot policy on public service provision: Evidence from China

Abstract

Urbanization serves as a catalyst for economic growth while simultaneously posing substantial challenges to urban public spaces, infrastructure, and environmental sustainability. Addressing these issues through innovative urban development models has become a critical priority in contemporary urban governance. In response, China introduced the New-Type Urbanization Pilot Policy (NTUP), presenting fresh strategies for modern urban transformation. This study uses the NTUP as a quasi-natural experiment, employing a multi-period difference-in-differences model to investigate the policy's impact on basic public service provision. The results reveal that the NTUP significantly enhances the overall level of public service provision by alleviating fiscal pressure and encouraging innovation. Additionally, the NTUP increases local government expenditure on education and social security, leading to a crowding-out effect on infrastructure investment. As a result, while the NTUP improves the quality of soft public services, it simultaneously reduces the level of hard public services. Furthermore, this study analyses the heterogeneous effects of the policy based on different economic growth goals, development levels and scales, providing new insights into the relationship between urbanization and public services. Overall, this study confirms the role of people-centred new-type urbanization in improving residents' welfare, enriching the exploration of modern urban development and offering practical evidence for urban transformation in other emerging market countries.