Policy Incentives, Optimization of Land Resource Allocation, and County-Level Total Factor Productivity

Against the backdrop of increasingly binding land constraints and the transition toward high-quality development, improving total factor productivity through more economical and intensive land use has become an important policy concern. This study treats the designation of National Model Counties for Economical and Intensive Use of Land Resources as a quasi-natural experiment and uses panel data for 1965 Chinese counties from 2004 to 2021 to examine its impact on county-level total factor productivity. A multi-period DID model shows that the policy significantly raises the county-level annual TFP growth index, which increases by an average of 0.0249 index points. The result remains robust after a series of robustness tests. Further analysis provides evidence on several potential channels. The policy significantly promotes invention patent grants, while its effects on design and utility model patents are statistically insignificant. It also reduces firm entry and the number of incumbent firms, indicating an adjustment in local firm dynamics, and significantly increases industrial agglomeration as measured by the location quotient. The heterogeneity analysis further suggests that the policy effect is weaker in areas with greater administrative fragmentation and more pronounced in counties facing higher fiscal pressure. These findings provide new evidence on how land-use constraints may promote county-level productivity improvement and offer policy implications for strengthening intensive land use, improving land-resource allocation, and supporting high-quality county-level development.