There has been no definitive consensus on how and how much city compactness affects urban poverty. In this section, we discuss possible explanations detailing the relationship between city compactness and urban poverty.
Headcount ratio, the proportion of the poor to the total population, is the most basic and widely used method for assessing the degree of poverty [
20,
21]. In this article, when we talk about poor people, we are referring to the “lower-income” class. Two main reasons explain why a city’s poverty level declines. The first is that the living standards are improved, lifting people out of poverty. The second is that poor people move into other cities for various reasons (e.g., the rising cost of living). The following subsection provides a detailed analysis of the potential impact of compact cities on total population and poor people.
2.1. Population Growth
The shape of a city is widely considered to affect location selection. When families or businesses decide where to relocate, they may consider city shape when weighing the benefits and drawbacks of various locations. Why is city shape important in location selection? We will address it separately from the standpoints of firms and families.
For firms, productivity is a major consideration in decision-making. When companies make investment decisions, they mainly consider differences in inter-sectoral and inter-regional productivity over other factors. The compactness and shape of a city can have various effects on productivity [
22]. Compact markets may allow for a more efficient sharing of indivisible facilities (e.g., local infrastructure), risks, and gains from variety and specialization. They can also facilitate better matchmaking between employers and employees, buyers and suppliers, joint projects partners, and entrepreneurs and financiers. In addition, compact markets can help facilitate and expedite the learning of new technologies, market evolutions, and new forms of organization. Due to these benefits, companies may be more likely to prefer highly compact areas.
Compact cities can also provide a number of benefits to families, such as better service delivery and increased accessibility since establishments and facilities are closer to one another. If a city’s compactness could result in greater efficiency, it would significantly increase the city’s appeal. Additionally, several studies have found that compared with low-density suburban residents, compact city residents feel that their needs are addressed to a greater degree [
15] and that they achieved significantly higher social well-being [
23].
If compact cities do indeed provide these benefits, then they are more likely to have larger populations. This would then suggest that city shape significantly influences the location choices of households and businesses. Based on these arguments, we propose the following hypothesis:
Hypothesis 1 (H1).
Urban compactness is positively correlated with population growth. As cities become more compact, the population grows faster.
After analyzing the impact of a city’s compactness on the total population, we explore its effect on poverty levels. Food, clothes, housing, and transportation are the four basic requirements of people. Among them, housing and transportation, i.e., space costs and commuting costs, have the most significant influence on the quality of life and location choices, particularly among low-income families. Therefore, we focus the analysis on these two aspects.
2.2. The Housing Impact for the Poor
The cost of housing is a crucial factor determining disposable income and life quality for low-income households. Extreme lack of affordability can contribute to homelessness for the least advantaged. In China, despite the government’s efforts of building low-rent and affordable housing in various locations for poor households, housing prices began to rise rapidly at the beginning of the 21st century, putting heavy burden on the urban poor. By understanding how city compactness affects residential affordability, decision-makers would be able to adopt changes and respond more effectively.
As urban areas become more compact, urban population growth tends to accelerate. A large influx of population naturally leads to an increase in demand for urban housing. Similarly, urban morphology influences housing supply. As compactness improves, urban land becomes scarcer and more expensive [
24,
25,
26], resulting in a major reduction in the housing supply.
Figure 1 shows the impact of city compactness on the supply and demand for housing. In general, for cities with low compactness, the demand for housing is less than the supply. This causes housing prices to decline, and a large number of houses are vacant. In contrast, for highly compact cities, housing demand exceeds supply, leading to rising housing prices. As a result, with the increase in urban compactness, housing will turn from surplus to scarcity, and housing prices will turn from decline to rise. Thus, we hypothesize the following:
Hypothesis 2.1 (H2.1). There is a nonlinear relationship between city shape and housing prices. When compactness is low, increasing compactness helps to lower housing prices. When the compactness is high, however, housing prices rise as the compactness improves.
It is a widely held view that urban places are not neutral spaces in terms of their impact on people’s lives [
9,
27]. In this study, the impact of housing prices is also assumed to be non-neutral for the urban poor. On the one hand, high house price is a pull factor for the poor’s location choice. This is because high house prices frequently indicate more employment opportunities and amenities, whereas low house prices indicate macro-structural weaknesses in an area or reduced employment opportunities. According to this viewpoint, cities with high house prices are appealing to the poor, while low-housing price cities are not preferred by the poor. As a result, areas with high housing prices tend to attract more poor people. On the other hand, high house price is also a push factor for the poor’s location choice. According to Roback [
28], house prices are the primary cost of living and working in cities, and they have a direct influence on the decision to live there. Low-cost housing can be attractive to migrants, particularly for impoverished residents, while high housing prices deter migration can serve as entry barriers for the poor, resulting in a negative relationship between housing price and poverty headcount ratio [
29]. When deciding on a location, it is critical to fully consider the costs (rents) and benefits (income) of regional housing prices. The impact of high house prices on the poor is two-fold: it increases the poor’s living burden while also bringing economic opportunities, implying that the poor must weigh the cost of living against employment opportunities. When the push factor outweighs the pull factor, house prices are negatively correlated with the incidence of poverty; when the pull factor outweighs the push factor, the opposite is true.
We should consider not only the impact of house prices on poor people’s location choices, but also the impact of house prices on the quality of life of local residents. Rising house prices have added to the urban population’s burden, potentially pushing more people into poverty. High house prices may lead to a decline in the quality of life of local residents and an increase in urban poverty if the increase in the cost of living caused by high house prices is greater than the economic benefits brought by job opportunities. On the contrary, high house prices may improve the quality of life of local residents and reduce urban poverty.
Thus, we hypothesize the following:
Hypothesis 2.2a (H2.2a). Housing price is negatively related to the incidence of poverty.
Hypothesis 2.2b (H2.2b). Housing price is positively related to the incidence of poverty.
2.3. The Transportation Impact for the Poor
The urban poor face enormous challenges in their daily lives. Many live in densely populated city spaces or in more remote suburban areas with limited access to jobs and social services. Inconvenient or prohibitively expensive transportation costs may significantly hamper people’s mobility and access to essential facilities and services. This may result in low living standards and even increased poverty levels. Transportation is crucial to the urban poor, and understanding the impact of traffic accessibility on impoverished communities is vital in developing poverty reduction policies and improving people’s living standards.
First, we need to understand the basic situation in urban transportation. For short intra-city travel, walking, bicycling, buses, taxis, and private cars are popular modes of transportation. However, in recent decades, urban transportation has increasingly been dominated by buses and private automobiles. For many travelers who prioritize accessibility and speed, public transportation is not often their first choice. Instead, private cars have become their preferred mode of transportation. In China, there were about 226.35 million private vehicles in 2019, 309 times the number in 1989, 42 times the number in 1999, and 5 times the number in 2009. However, for those with less income, they rely heavily on low-cost modes of transportation such as walking, bicycles, electric vehicles, or buses. Thus, there are significant differences in travel between the poor and the non-poor that should be considered when analyzing the impact of compact cities.
It is generally believed that compact cities have the potential to reduce the distance between home and work and reduce the use of private cars, saving time and money spent on commuting [
30], and public transportation is considered to work better [
31]. In this study, we posit that the relationship between urban compactness and transportation is not necessarily linear. At different levels of compactness, the improvements in transportation infrastructure can vary considerably. When urban compactness is low, demand for motor transportation rises rapidly, so that the rate of vehicle ownership growth is often faster than the rate of public transport to accommodate traffic growth [
32]. Piecemeal transportation development to alleviate traffic bottlenecks on the road network frequently comes at the expense of the poor. Private cars reduce the passenger flow of public transport and eliminate the financial feasibility of the public transport system, resulting in the decline of service quality and quantity. In cities with low compactness, the growth trend of private vehicle use plays a leading role in terms of convenience.
When urban compactness is relatively high, infrastructure improvements would include projects catering to high population density, such as buses and subways. This is because compact cities can improve public transportation utilization by strengthening land use near public transportation stations, which greatly improves the feasibility of public transport supply [
33]. Newman and Kenworthy [
34] found indirect evidence that higher-density cities are associated with high use of public transport. As public transport declines, population density drops at around 20–30 people per hectare [
35]. As cities become more compact, commuting distances decrease, the benefits of public transportation infrastructure also become more apparent, thus the demand for private cars decreases. Based on the discussion, we propose the following hypothesis:
Hypothesis 3.1 (H3.1). The relationship between city shape and private cars is inverted-U-shaped.
Hypothesis 3.2 (H3.2). The relationship between city shape and public transportation is U-shaped.
For the two modes of transportation, the impact on the poor must be discussed separately. The expansion of public transportation will attract the poor, whereas the increase of private cars will reduce the poor’s quality of life. In less compact cities, public transportation is relatively poor. This would then cause the number of private cars to grow, but low-income families are unable to afford them. They would then have to deal with long-distance commutes and heavy traffic. The difficulties and high costs associated with long commutes may also result in missed job opportunities, further hindering economic mobility. In comparison, infrastructure in densely populated cities is often better, providing better access to public transportation. As cities become more compact, the number of private cars decreases, traffic congestion decreases, and the difficulty and cost of commuting for the poor decreases. According to Glaeser et al. [
36], public transportation is an important policy instrument that can influence the location decisions. The location preference of low-income families is highly sensitive to traffic conditions. When commuting conditions are poor, low-income families tend to emigrate, thus reducing the number of poor people in the city. In contrast, favorable commuting conditions and good infrastructure may attract low-income migrants, causing urban poverty levels to rise. Therefore, we expect the following:
Hypothesis 3.3 (H3.3). The number of private cars is positively related to urban poverty.
Hypothesis 3.4 (H3.4). Public transportation is positively related to urban poverty.
Urban compactness indicates the state of compactness of a given city. When the city’s compactness is low, we assume it is not compact and may even spread disorderly. When the city’s compactness is high, the distribution of urban economic activity is also compact. Based on the above discussion on total population growth and the impact of housing and transportation on the poor, we argue that the impact of compact cities on urban poverty is nonlinear and complex. We therefore hypothesize:
Hypothesis 4 (H4). The impact of city shape on urban poverty is nonlinear.