Land Price Distortion and Rural Inequality

Abstract: Existing literature demonstrates that local governments intentionally reduce industrial land prices to attract investment while increasing residential land prices to boost government revenue. This “development on land” strategy promotes economic growth but comes with the cost of increasingly inequality in rural areas. This paper provides systematically empirical evidence of how local governments’ intervention in residential land prices worsens rural inequality. I construct a dataset on rural inequality using nightlight density from satellite imagery. This approach allows me to measure inequality based on geographical boundary. Combining this dataset with land price data extracted from government digital archives, I show how residential land price distortion contributes substantively to rural inequality.