Does the Compact City Paradigm Help Reduce Poverty? Evidence from China

City shape is an essential reflection of spatial structure, but it has largely been ignored in urban form research. This study employs night-time satellite imagery to depict the scope of urban economic activity to investigate its impact on urban poverty. It is the first study to provide a comprehensive assessment of the mechanisms of city shape on urban poverty by using the fixed-effect estimate methodology for panel data of 285 Chinese cities from 2000 to 2018. The results showed that city compactness has an inverted U-shaped relationship with poverty incidence, which was verified by several robustness tests. Compactness can significantly attract more population into the city, and space costs and commuting costs are important influence channels. Furthermore, there exists heterogeneous nexus between city shape and urban poverty. Compactness has more significant poverty reduction effects in low-attractive cities with low productivity, low wages, and high illiteracy rates.