Urban Land Revenue and Common Prosperity: An Urban Differential Rent Perspective

Abstract

Common prosperity serves as a pivotal condition for achieving sustainable development by fostering social equity, bolstering economic resilience, and promoting environmental stewardship. Differential land revenue, as a crucial form of property based on spatial resource occupation, significantly contributes to the achievement of common prosperity, though empirical evidence of its impact is limited. This study explores the potential influence of land utilization revenue disparity on common prosperity from the perspective of urban macro differential rent (UMDR). Utilizing panel data from 280 Chinese cities spanning 2007 to 2020, we discover that UMDR and common prosperity levels exhibit strikingly similar spatiotemporal evolution. Further empirical analysis shows that UMDR significantly raises urban common prosperity levels, with a 0.217 standard unit increase in common prosperity for every 1 standard unit rise in UMDR. This boost stems from enhanced urban prosperity and the sharing of development achievements, encompassing economic growth, improved public services, enhanced ecological civilization, and more equitable distribution of development gains between urban and rural areas and among individuals. Additionally, we observe that UMDR has a more pronounced effect on common prosperity in eastern cities and those with a predominant service industry. This study enhances the comprehension of the relationship between urban land revenue disparities, prosperity, and equitable sharing, presenting a new perspective for the administration to contemplate the utilization of land-based policy tools in pursuit of the common prosperity goal and ultimately achieve sustainable development.

1. Introduction

Common prosperity, with its emphasis on addressing income disparities, narrowing the poverty gap, and achieving inclusivity, has gained global consensus [1,2,3,4]. This consensus reflects the vision of human society, advocated by Stephanie Kelton, where prosperity is widespread and shared, with an economy that benefits everyone, not just those at the top [5]. Governments worldwide commit to this developmental goal for human society, recognizing the pivotal role of common prosperity in attaining sustainable development. In China, common prosperity is emphasized as a long-term goal following the elimination of extreme poverty and the realization of a moderately prosperous society, aiming to address issues of inequality and underdevelopment [6]. Essentially, common prosperity pertains to the elimination of polarization and poverty. Based on the practice of China’s social and economic development, the concept of common prosperity integrates “development” and “sharing”, aiming to achieve “shared prosperity” rather than “equal prosperity” through redistribution [7]. The concept first emphasizes urban prosperity, meaning the continuous improvement of societal welfare and well-being at higher levels of development [8]. This is manifested through enhanced economic growth, public services, and ecological civilization, forming the essential material foundation for achieving common prosperity. Second, common prosperity is defined by the principle of sharing development achievement, ensuring that the benefits of reform and development are distributed more equitably among all people [9]. This necessitates a balanced distribution of gains across urban and rural areas, throughout provinces, and among urban residents themselves. Therefore, common prosperity represents a situation where both the material and spiritual well-being of individuals are enhanced, ensuring equal rights for different groups to access wealth and quality public services [8,9]. It involves an ongoing process of good governance that adapts to societal changes. Development must be aligned with the carrying capacity of the population, resources, and environment, and it must also keep pace with social progress [9]. Currently, China has made significant progress in eradicating extreme poverty [10,11]. Its large economy and population of around 1.4 billion continue to pose challenges in advancing common prosperity. China still faces significant income and wealth disparities, with a Gini coefficient persistently above 0.46 and wealth inequality showing signs of renewed expansion [12]. In addition, the expanding urban–rural divide and regional development disparities emphasize the pressing need to develop a strategy for equitable growth [13]. Therefore, China urgently needs a comprehensive approach to achieving common prosperity. Given China’s economic scale and demographic diversity, its strategies and successes in this area are paramount and provide a pivotal case study for the global effort.

In China’s state-owned urban land system, local governments rely on land transfer fees as a primary revenue source [14]. Representing the transaction price for urban land use rights, land transfer fees serve as a capitalized income from leasing land, reflecting the combined revenue of urban land utilization and distribution [15]. The land utilization revenue of a city significantly impacts its local government’s fiscal capacity and the national income redistribution [16,17]. Recently, disparities in land revenue among cities have widened rapidly due to differences in locational factors and capital investment [15], leading to the emergence of urban macro differential rent (UMDR). It refers to the land differential income, which exceeds the absolute land rent of a city due to variations in location, scale, and function. The UMDR serves as the financial backbone for local governments, enabling them to craft policies that attract resources, invest in urban public infrastructure, and optimize the allocation of ecological space [18,19,20]. This fiscal strategy is pivotal for enhancing urban economic growth, improving public services, and advancing ecological sustainability [21,22,23]. Moreover, UMDR enables local governments to implement targeted policies that bridge development gaps between urban and rural areas, as well as different population groups, distributing wealth and opportunities more equitably by leveraging differences in land value and financial returns [24,25]. By addressing specific economic and social needs, UMDR supports more balanced and inclusive development, which is pivotal for achieving common prosperity [26]. Given the notable influence of land value and related fiscal revenues on socio-economic objectives, it is crucial to analyze UMDR’s contribution to achieving common prosperity in China.

Scholars have extensively researched the differential land rent across different regions within cities and proposed that urban differential rent can maximize the rational use of limited land and enhance the environmental, social, and economic benefits of urban land use [27,28,29,30,31]. However, few studies focus on UMDR that examine this concept from a broader citywide perspective. The significant and rapidly expanding differences in land rent among cities of various tiers are influenced by factors such as geographical location, economic development level, future development expectations, and capital flow [32]. Scholars devised a calculation model for UMDR, applying Marx’s theory of ground rent. They contend that UMDR, generated by disparities in location and investment, aggravates urban inequality, impeding equal regional development [33]. Contrary to this viewpoint, certain scholars argue that UMDR exerts a beneficial influence on urban development. They highlight the beneficial effects of UMDR, arguing that it boosts the quality of urban development by stimulating factor flow, fostering industrial upgrades, and so forth [15]. These findings suggest that views on the impact of UMDR are divided and need further investigation.

Existing research mainly focuses on constructing and evaluating indicator systems for common prosperity [6,34], examining their impact factors, such as resource utilization efficiency [35], low-carbon initiatives [36], and digital inclusive finance [37]. The relationship between UMDR and common prosperity is less established. A related study on the impact of UMDR on regional economic disparities in China finds that the emergence of UMDR is accompanied by uneven regional economic development, with increasing disparities in land rent between cities leading to wider regional economic gaps. The scholar believes that narrowing the land rent gap between underdeveloped and developed cities promotes the reduction of regional economic disparities [38]. Using 273 prefecture-level cities in China from 2004 to 2017 as research subjects, other scholars employed econometric models and mediation effect models to examine the impact mechanism of UMDR on high-quality urban development. They concluded that UMDR significantly promotes the high-quality development of cities through several mechanisms: accelerating factor flow, fostering coordinated industrial development, improving infrastructure supply, equalizing public services, stabilizing fiscal support, and protecting the ecological environment [15]. The aforementioned research findings primarily explore the impact of UMDR on regional disparities and the economic and social development of cities, addressing only a small aspect of the connotation of common prosperity and not extending to the impact of UMDR on common prosperity. Addressing this gap, we explore the spatiotemporal evolution and causal relationship between UMDR and common prosperity by using data from 280 Chinese cities spanning 2007 to 2020.

In our paper, we comprehensively measure the common prosperity index and the degree of UMDR. Throughout the study period, both indices showed a distinct upward trend and displayed a significant spatial correlation. Further econometric analysis confirmed that UMDR significantly enhances the level of common prosperity. This conclusion remains robust after conducting a series of general endogeneity tests and implementing controls for endogeneity. Our analysis reveals that UMDR boosts common prosperity by enhancing urban prosperity and development achievement sharing. Moreover, our findings demonstrate that the effects of UMDR on common prosperity, urban prosperity, and development achievement sharing are notably stronger in eastern cities and those where service industries dominate the economy.

To the best of our knowledge, this study is the first to analyze the impact of urban differential rent on common prosperity. It enriches the existing literature in three ways. First, our study offers a fresh insight into understanding the urban land revenue disparity and the common prosperity development goal through the empirical evidence on differential land rent from a broad citywide perspective. By broadening the scope to encompass entire cities, our study offers a more comprehensive understanding of how land revenue dynamics at a macro level influence the broader socio-economic outcomes. Second, by meticulously deconstructing and analyzing the layers of common prosperity indicators, we explored the impact mechanisms of UMDR on common prosperity across various dimensions. This detailed approach is vital considering the multifaceted nature of common prosperity. By dissecting these layers, our study deepens the understanding of how UMDR influences various facets of urban development and achievement sharing and identifies critical areas for policy intervention to foster common prosperity. Third, our study offers valuable insights from a developing country perspective, demonstrating that urban land revenue disparity can be a potent catalyst for common prosperity. This is particularly relevant for countries with substantial state land holdings, where our findings can inform and enhance land regulation reforms. Moreover, our study systematically underscores the dual functionality of land rent, not only as a mechanism for fostering economic growth but also as a means to promote social and regional equity.

The rest of this paper is organized as follows: Section 2 provides the theoretical analysis and hypotheses. Section 3 presents the methodology. Section 4 reports the results and analysis. Section 5 introduces the mechanism analysis. The heterogeneity effect is presented in Section 6. Finally, Section 7 draws the conclusions.

2. Theoretical Analysis and Hypotheses

This section explores the relationship between UMDR and common prosperity through theoretical analysis and hypothesis development. Specifically, we conduct theoretical studies on UMDR’s impact on common prosperity, urban prosperity, and development achievement sharing. Then, we put forward corresponding hypotheses for each dimension, and these assumptions will be tested in subsequent sections.

2.1. UMDR and Common Prosperity

This section investigates the impact of UMDR on common prosperity through the dual lenses of government economic capabilities and urban entry thresholds. By elevating these factors, UMDR contributes to achieving common prosperity.

As a crucial instrument reflecting the variations of the urban land value and its fiscal return among cities, UMDR can leverage government intervention and market mechanisms to influence urban prosperity and the distribution of developmental gains, ultimately altering common prosperity. Specifically, an increasing UMDR indicates a rise in the fiscal revenues for local governments [14,39], which strengthens their economic capabilities [17,40]. This fiscal strengthening enables governments to be more dynamic and effective [41]. Economically robust governments can surrender certain interests to boost comprehensive urban prosperity [42]. Sufficient fiscal revenue enables authorities to enhance focus on rural development, resource acquisition from higher authorities, and better wealth distribution, leading to more equitable achievement sharing across urban and rural areas, within the province, and among urban individuals.

Furthermore, a higher UMDR leads to expanded land use prices, creating an entry barrier to the local market. This barrier effectively filters out less advanced individuals through market mechanisms, favoring those with a competitive edge [43]. Such a market-driven shift contributes to the enhancement of urban prosperity. The positive urban development driven by entry barriers also radiates to surrounding rural areas, enhancing the city’s competitiveness within its province, motivating the government to intensify wealth distribution efforts, and lifting the sharing of development outcomes. By raising government economic capabilities and urban entry threshold, UMDR can contribute to common prosperity by promoting urban prosperity and development achievement sharing. UMDR, while fostering aggregate common prosperity, may simultaneously create structural pressures. Proactive policy measures are thus required to prevent potential spatial or socio-economic exclusion. In this sense, UMDR functions as both an engine for inclusive development and a governance challenge, with its ultimate impact heavily contingent upon how land-derived revenues are reinvested and redistributed.

Hypothesis 1.

UMDR benefits the common prosperity goal.

2.2. UMDR and Urban Prosperity

The prosperity of a city is marked by economic growth, improved public services, and advanced ecological protection [44]. UMDR, by strengthening government finances and raising the market entry threshold, aids in economic development, service enhancement, and environmental protection efforts.

Enhancing government fiscal capabilities through UMDR enables local officers to develop appealing subsidy policies for skilled labor, capital investment, and advanced technology [18,45]. Such measures reinforce the concentration of key production factors in the city, pushing the optimization of factor structure and efficient resource allocation [21,46,47,48], thereby facilitating economic growth. UMDR also raises the entry barriers to the local market, selectively filtering out less advanced enterprises through market mechanisms and favoring those with strong financial resources, high production efficiency, and significant value addition 15. This selective process contributes to industrial structure upgrading, boosts fixed asset investment, and increases tax revenues, driving urban economic development [49].

Since the provision of public services heavily depends on local fiscal capacity [19], UMDR equips local governments with the necessary fiscal base to enhance urban public investments [50]. In cities with high UMDR, governments are able to obtain greater land rent income, allowing them to boost investments in urban public areas, such as transportation, healthcare, public culture, and social security. This increased investment significantly enhances the provision of urban public services [22,26,51,52]. Additionally, the influx of advanced firms, selected by increased local entry barriers [53], generates numerous employment opportunities, attracting highly skilled professionals [54] and boosting the demand for superior public services. In response to this heightened demand, cities further enhance their public services [55].

Rapid economic development has escalated the need for enhanced environmental quality to support sustainable socio-economic growth [56]. Local governments play a crucial role in improving environmental quality [20]. By enhancing the financial strength of governments, UMDR encourages local authorities to increase fiscal investments in ecological and environmental protection. Such fiscal commitment enhances urban pollution control and spurs low-carbon technological innovation, markedly benefiting the urban ecology. Furthermore, by imposing higher entry barriers, UMDR strategies concentrate competitive enterprises, a move critical for fostering technological innovation in urban sectors [57]. This targeted approach improves green production efficiency in city industries, stimulating the overall eco-friendliness of cities.

Hypothesis 2a.

UMDR facilitates economic growth, resulting in a growth in common prosperity.

Hypothesis 2b.

UMDR improves public services, thereby boosting common prosperity.

Hypothesis 2c.

UMDR increases the urban ecological civilization level, contributing to common prosperity.

2.3. UMDR and Development Achievement Sharing

Development achievement sharing targets three key areas: balancing growth between urban and rural regions [42], equalizing opportunities within provinces [58], and ensuring equitable resource distribution among urban residents [24]. In these domains, UMDR also demonstrates potential effectiveness.

Whether a city can share the development opportunities within a province depends on the economic strength of the cities themselves [59]. Cities with higher UMDR are typically more financially adequate, gaining easier access to policy support from higher authorities and attracting more production factors from the region [60,61]. Crucially, the entry threshold effect of UMDR further amplifies the competitive advantage of these cities. This advantage promotes their growth and positions them to benefit from the overall development of their province. Consequently, increased UMDR enables the city to experience accelerated progress via both self-creation and sharing the regional achievement.

The coordinated development of urban and rural areas strongly relies on the fiscal strength created by UMDR. Enhanced land rent revenues empower governments to increase investments in agriculture and rural welfare [62], which is crucial for sharing the benefits of urban economic growth with rural communities [63,64]. It also involves a greater focus on rural regions allocating public services for education, healthcare, and social security, thereby reducing disparities in basic public services between urban and rural settings [65,66]. Furthermore, UMDR-driven urban prosperity, driven by the threshold effect, positively impacts surrounding rural areas through market mechanisms [67]. Such influence leads to a rise in non-agricultural employment for rural residents, enhances their property income, and stimulates rural industrial growth [68]. Thereby, UMDR fosters a more balanced development between urban and rural communities.

Governmental wealth distribution plays a crucial role in ensuring that the benefits of development are shared equitably among all segments of society [26]. UMDR has enhanced local financial resources, enabling local governments to better support disadvantaged groups through taxes, fiscal transfers, and social security [16]. Such actions contribute to reducing disparities in initial wealth distribution, thereby elevating the equitable distribution of development outcomes among residents. The urban prosperity driven by the entry barriers motivates the government to intensify its efforts in wealth distribution, leading to a fairer distribution of development outcomes, making progress and prosperity accessible to everyone, irrespective of socio-economic status.

Hypothesis 3a.

UMDR promotes intra-provincial resource sharing, further facilitating its common prosperity.

Hypothesis 3b.

UMDR enhances the sharing across urban and rural areas, contributing to common prosperity.

Hypothesis 3c.

UMDR strengthens the sharing among urban individuals, fostering common prosperity.

The theoretical analysis framework of this paper is shown in Figure 1.

3. Methodology

3.1. Variable Setting and Data Source

China encompasses 34 provincial-level administrative divisions, totaling 293 prefecture-level cities. Excluding cities with severe data deficiencies, this paper utilizes 280 prefecture-level cities across 26 provinces in China from 2007 to 2020 as the research sample. Missing data values are addressed through interpolation to maintain dataset integrity. We employ the Winsorize method to perform 1% and 99% truncation on explained variables, explanatory variables, and control variables, reducing the interference of data outliers on research outcomes and enhancing the reliability and stability of the data. Additionally, we apply logarithmic processing to the population density data in the control variables to narrow the absolute gap between the data. The variable selection and data sources are detailed as follows.

3.1.1. Selection and Calculation of Common Prosperity

Common Prosperity Index (CPI). Drawing on the achievements of scholars [34,42,69], this paper considers constructing the indicator system of common prosperity from two dimensions: urban prosperity and development achievement sharing. Specifically, urban prosperity embodies the “prosperity” aspect of common prosperity, while development achievement sharing reflects the “common” aspect. We select indicators of urban prosperity from three dimensions, including economic development (economic), public services, and ecological civilization (ecology). Additionally, we choose development achievement sharing indicators from regional sharing (regional), urban–rural sharing (urbrural), and individual sharing (individual) dimensions. These six sub-dimensions collectively form the common prosperity evaluation index system. Among them, public services are described in four aspects: transportation construction (transportation), medical and healthcare (healthcare), public culture (culture), and social security (insurance) for detailed analysis.

Table 1. The measurement index system for common prosperity.

Dimension	Sub-Dimension		Description of Variables in the Sub-Dimension (Unit)	Effect
Urban prosperity	Economic development		GDP per capita (CNY)	+
			Disposable income per urban resident (CNY)	+
			Disposable income per rural resident (CNY)	+
			The ratio of per capita consumption expenditure on food, tobacco, and alcohol to total per capita consumption expenditure	−
			The ratio of GDP to average annual number of persons engaged	+
	Public services	Transportation construction	The number of buses (trams) in operation at the end of the year	+
			The number of cabs in operation at the end of the year	+
			Urban road area (10,000 m2)	+
			Urban road area per capita (m2)	+
		Medical and healthcare	The number of hospitals and health centers	+
			The number of doctors	+
			The number of beds in hospitals and health centers	+
		Public culture	The ratio of education expenditure to local government public budget expenditure	+
			The number of colleges and universities	+
			The number of patents granted	+
			The number of books in public libraries	+
		Social security	The number of participants in basic pension insurance for urban employees	+
			The number of participants in basic medical insurance for employees	+
			The number of participants in unemployment insurance	+
	Ecological civilization		Industrial wastewater emissions (t)	−
			Industrial sulfur dioxide emissions (10,000 t)	−
Development achievement sharing	Regional sharing		The ratio of the maximum per capita disposable income within the same province to the city	−
			The ratio of the maximum per capita fiscal revenue within the same province to the city	−
	Urban–rural sharing		The ratio of disposable income per urban resident to disposable income per rural resident	−
	Individual sharing		The ratio of local government public budget revenue to average annual population (CNY)	+
			The ratio of tax revenue to local government public budget revenue	+
			The ratio of corporate personal income tax to local government public budget revenues	+

Notes: “+” means positive indices; “−” means negative indices.

displays our indicator system comprising 27 specific indicators. Further explanation is needed regarding the specific indicators for measuring the level of development achievement sharing. We assess “sharing” at three levels. First, the level of resource sharing among cities within the province is characterized by the ratio of the maximum per capita disposable income and per capita fiscal income within the province to those of the city. Second, the degree of coordinated development between urban and rural areas is indicated by the ratio of per capita disposable income between urban and rural residents. Third, the level of urban finance and taxation reflects the degree of resource sharing at the individual level. Table 1 displays our indicator system comprising 27 specific indicators. Our study follows scholars [37] and adopts the entropy method for weighting each indicator, with the comprehensive score derived being employed to evaluate the CPI in a city.

Prosperity Index (PI). To assess PI, we use the indicators of urban prosperity in Table 1. We first measure comprehensive indicators of economic, transportation, healthcare, culture, insurance, and ecology. Subsequently, we apply the entropy method to determine their weights, expressing this as a weighted average.

Sharing Index (SI). To evaluate SI, we employ the development achievement sharing metrics outlined in Table 1. Initially, we separately assess regional, urbrural, and individual, followed by the application of the entropy method to calculate the index’s value.

3.1.2. Calculation of the UMDR

Urban macro differential rent (umdr). In accordance with the methodology proposed by scholars, we compute the land rent for each city based on the land transfer fees [35]. The calculation formula for land rent is as follows:

$$P={\sum }_{i=1}^{70}L/{(1+r)}^i$$

(1)

where $L$ represents urban land rent, $P$ represents unit land transfer fees, and $i$ denotes the land use period, with a value of 70, as land users can acquire a maximum of 70 years of land-use rights in China. The discount rate $r$ is fixed at 3%, representing the average of the 5-year fixed deposit interest rate of banks and the interest rate of personal housing provident fund loans with terms exceeding 5 years.

The formula above allows us to derive the urban land rent for 280 cities from 2007 to 2020, and then we can calculate the UMDR within the province. The city with the lowest land rent within the province serves as the benchmark city. The UMDR for each city is determined by calculating the difference in land rent between that city and the benchmark city. In this study, the UMDR of the benchmark city is set at 0.001.

3.1.3. Control Variables and Data Source

Building upon relevant research findings [37], we chose the following urban characteristic variables as control variables: (1) Government fiscal capacity (fc) is expressed as the ratio of local public budget revenue to regional GDP. (2) The ratio of local public budget expenditure to regional GDP represents the degree of government intervention (gov). (3) The ratio of tertiary industry to secondary industry indicates the industrial structure (is). (4) The degree of openness to the outside world (open) is the ratio of the amount of foreign capital used in the year to the regional GDP. (5) The ratio of the balance of RMB loans from financial institutions to regional GDP at the end of the year is the level of financial development (findev). (6) Population density (lnpop) is measured by taking the logarithm of the ratio of the annual average population to the built-up area.

The data on land transfer fees are sourced from the Chinese Land Market Website (https://www.landchina.com/#/ (accessed on 9 October 2023), while the data for other variables come from the China Urban Statistical Yearbook, China Statistical Yearbook, statistical yearbooks of various provinces, and annual statistical bulletins. Detailed descriptive statistics of variables are presented in

Table 2. Descriptive statistics of variables.

Variables	Definition	Obs.	Mean	SD	Min	Max
umdr	Urban macro differential land rent	3920	0.0275	0.0470	0.0000	0.3257
CPI	Common prosperity	3920	0.0536	0.0486	0.0127	0.5422
PI	Urban prosperity level	3920	0.0513	0.0492	0.0101	0.5463
economic	Economic development	3920	0.1485	0.0701	0.0269	0.4629
transportation	Transportation construction	3920	0.0430	0.0579	0.0009	0.6328
healthcare	Medical and healthcare	3920	0.0741	0.0548	0.0002	0.5288
culture	Public culture	3920	0.0377	0.0534	0.0039	0.6177
insurance	Social security	3920	0.0364	0.0509	0.0000	0.6824
ecology	Ecological civilization	3920	0.9376	0.0631	0.3209	0.9978
SI	Development achievement sharing level	3920	0.1710	0.0444	0.0787	0.4361
regional	Regional sharing	3920	0.9464	0.0650	0.5964	0.9925
urbrural	Urban–rural sharing	3920	0.9537	0.0204	0.8791	0.9868
individual	Individual sharing	3920	0.1229	0.0470	0.0250	0.4024
fc	Government fiscal capacity	3920	0.0717	0.0250	0.0287	0.1478
gov	Government intervention	3920	0.1875	0.0965	0.0662	0.6068
is	Industrial structure	3920	0.9397	0.4740	0.2616	2.9499
open	Openness to the outside world	3920	0.0175	0.0180	0.0000	0.0873
findev	Financial development	3920	0.9181	0.5387	0.2840	3.1464
lnpop	Population density	3920	6.0255	0.7951	4.0073	7.6715

Notes: The UMDR data is divided by 1000.

.

3.2. Empirical Strategy

3.2.1. Basic Estimation

To explore the relationship between UMDR and common prosperity, we have established the following empirical regression benchmark model:

$${CPI}_{it}=\theta +\beta {umdr}_{it}+\gamma X_{it}+{\mu }_i+{\lambda }_t+{\epsilon }_{it}$$

(2)

where $i$ denotes the city, and $t$ denotes the year; $\theta$ represents the intercept; $\beta$ and $\gamma$ are coefficients for the explanatory variable and the control variables, respectively. ${CPI}_{it}$ represents the level of common prosperity in $i$ city in $t$ year; ${umdr}_{it}$ represents the level of UMDR; $X_{it}$ represents the control variables. ${\mu }_i$ and ${\lambda }_t$, respectively, represent individual fixed effects and time fixed effects. ${\epsilon }_{it}$ is the random disturbance term.

3.2.2. Mechanism Analysis Method

We further use the intermediary model to uncover the underlying mechanisms by which UMDR impacts common prosperity. The specific model settings are as follows:

$$M_{it}=\theta +\beta {umdr}_{it}+\gamma X_{it}+{\mu }_i+{\lambda }_t+{\epsilon }_{it}$$

(3)

$${CPI}_{it}=\theta +{\beta umdr}_{it}+\delta M_{it}+\gamma X_{it}+{\mu }_i+{\lambda }_t+{\epsilon }_{it}$$

(4)

where $M_{it}$ represents the intermediary variable, including variables related to the urban prosperity degree and the degree of development achievement sharing. The meanings of other symbols are consistent with Formula (2).

3.2.3. Robustness Testing Methods

To rigorously address potential endogeneity concerns and strengthen the causal inference between UMDR and common prosperity, we conduct robustness tests. First, we employ the two-step system generalized method of moments (SGMM) for model estimation to mitigate bidirectional causality between explanatory and dependent variables. The Generalized Method of Moments (GMM) is a parameter estimation approach based on the premise that actual model parameters satisfy specific moment conditions. Blundell and Bond (1998) advanced this methodology by treating difference equations and level equations as an integrated system for GMM estimation, known as System GMM (SGMM) [70]. Second, we address endogeneity through instrumental variable (IV) methods. By constructing instrumental variables to partially substitute for explanatory variables correlated with stochastic disturbance terms, this approach ensures that estimation results maintain desirable statistical properties of unbiasedness and consistency. The IV method is typically implemented via two-stage least squares (2SLS), where a necessary condition for 2SLS estimation requires that the number of instrumental variables must be at least equal to the number of endogenous explanatory variables [71].

4. Results and Analysis

4.1. Spatiotemporal Evolution of UMDR and Common Prosperity

To explore the spatiotemporal evolution characteristics of UMDR and common prosperity, we use ArcGIS10.8 software to visualize the UMDR and common prosperity index of 280 cities in 2007, 2014, and 2020. Figure 2 reveals the significant spatiotemporal evolution of UMDR from 2007 to 2020, with a more pronounced increase in 2014–2020 compared to 2007–2014. Specifically, there is less variation in land rents between cities in 2007, with high UMDR observed only in a few central and eastern cities, including Nanchong and Bazhong in Sichuan Province, Ankang and Xi’an in Shaanxi Province, Hangzhou and Wenzhou in Zhejiang Province, and Nantong in Jiangsu Province. In 2014, central–western cities experienced a modest increase in UMDR, while UMDR in southeastern coastal cities increased markedly. In 2020, the UMDR of cities across various regions notably improved, particularly in the eastern region, where the average UMDR level surpassed that in the central and western regions.

As illustrated in Figure 3, the average level of common prosperity in 280 cities demonstrates an upward trend during the same period, indicating that China is making progress in advancing the common prosperity process. By transforming the economic development model and improving the quality of economic development, China is endeavoring to address issues related to unbalanced and insufficient regional development to achieve comprehensive development encompassing material, cultural, social, and ecological aspects. We note that in 2007, only the provincial capital cities such as Chengdu, Kunming, Xi’an, Hangzhou, Suzhou, Fuzhou, and Changchun exhibited a high level of common prosperity because of China’s low level of economic development. The level of common prosperity in cities observably improved in 2014 and 2020. Nevertheless, we observe substantial disparities in regional development, with a higher level of common prosperity in the eastern region than in the western region.

Comparing the spatial patterns of UMDR and common prosperity, we discern a clear and significant relationship between their evolution within cities over time. The parallel increases in UMDR and common prosperity suggest a robust connection between them. This pattern is not coincidental, yet it appears indicative of underlying economic and social dynamics. The consistent upsurge in UMDR seems to foster conditions that enable common prosperity, possibly by enhancing local fiscal capacities or stimulating highly qualified economic activities. This observed trend lays the groundwork for a more in-depth investigation into how UMDR specifically influences common prosperity.

4.2. Impact of UMDR on Common Prosperity

4.2.1. Basic Estimation Results

Table 3. Basic estimation results.

Variables	(1)	(2)	(3)	(4)
	CPI	CPI	CPI	CPI
umdr	0.699 ***	0.486 ***	0.236 ***	0.217 ***
	(0.038)	(0.039)	(0.023)	(0.023)
fc		0.100 ***	0.153 ***	0.050 ***
		(0.029)	(0.016)	(0.016)
gov		−0.143 ***	−0.058 ***	−0.089 ***
		(0.008)	(0.008)	(0.009)
is		0.011 ***	0.008 ***	0.005 ***
		(0.002)	(0.001)	(0.001)
open		0.173 ***	−0.114 ***	−0.074 ***
		(0.037)	(0.026)	(0.024)
findev		0.019 ***	0.008 ***	0.003 **
		(0.002)	(0.002)	(0.001)
lnpop		−0.004 ***	−0.015 ***	−0.004 **
		(0.001)	(0.001)	(0.002)
Intercept	0.034 ***	0.053 ***	0.125 ***	0.078 ***
	(0.001)	(0.005)	(0.009)	(0.009)
Year fixed effects	NO	NO	NO	YES
Individual fixed effects	NO	NO	YES	YES
Obs.	3920	3920	3920	3920
Adj R-squared	0.456	0.592	0.937	0.944

Notes: ** and *** denote the significance levels of 0.05 and 0.01, respectively.

shows the impact of UMDR on common prosperity. To demonstrate the robustness of the estimation results, we progressively incorporate control variables, individual fixed effects, and time fixed effects into the econometric model. The results reveal that the coefficients of the explanatory variable in all models are positive and significant at a 1% confidence level. Additionally, the coefficients of the explanatory variable significantly decrease in columns (1) and (2) after adding control variables to the model, indicating that the control variables introduced in this study are necessary and appropriate. Moreover, through the control of individual fixed effects, the fit of the model has significantly improved. As shown in column (3), the adjusted R-squared increases to 0.937.

The model presented in column (4), which includes all control variables, time, and individual fixed effects, exhibits the best fit and is consequently the central focus of this paper. The coefficient of the explanatory variable is 0.217, signifying that a 1 standard unit increase in UMDR corresponds to a 0.217 standard unit increase in the common prosperity level of the city, with other factors held constant. Our research results suggest that the increase in UMDR can improve the common prosperity level, showing a significant positive correlation. The results align with our theoretical analysis, suggesting that UMDR is conducive to the realization of common prosperity. Hypothesis 1 is confirmed. This article argues that UMDR, as a cornerstone of local finance and a prerequisite for market entry, incentivizes local governments to develop policies that attract resources, invest in urban public infrastructure, and optimize ecological spatial allocation. These measures are crucial for promoting urban economic growth, improving public services, and ensuring ecological sustainability. Simultaneously, UMDR encourages local governments to utilize secondary distribution, enabling more equitable distribution of wealth and opportunities across different groups. Ultimately, this leads to achieving both “spiritual and material prosperity” and “shared prosperity.”

The regression results of control variables indicate that the coefficients for government fiscal capacity, industrial structure, and financial development are significantly positive. This suggests that enhancing government fiscal capacity, increasing the proportion of the tertiary industry in GDP, and improving financial development all contribute to advancing the level of common prosperity. These findings align with previous research by scholars [72]. However, there is a negative correlation between government intervention and the level of common prosperity, indicating that excessive government intervention in the economy suppresses the advancement of common prosperity. To promote sustainable economic development and achieve substantial progress in common prosperity, the decisive role of the market in resource allocation should be fully utilized. The result indicates that opening up to the outside world is not conducive to promoting common prosperity, which may be due to the natural location and industrial advantages of attracting foreign investment in the affluent areas along the southeast coast and urban areas. The inflow of foreign investment into these regions may further widen the income gap between them and underdeveloped rural areas, thereby hindering the achievement of common prosperity. Additionally, the incessant rise in population density poses a hindrance to the attainment of common prosperity by potentially causing shortages in resources and infrastructure, exacerbating socio-economic disparities and environmental pollution, thereby diminishing the overall quality of life.

4.2.2. Robustness Tests

Conventional robustness tests. Firstly, we adjust the explanatory variable, replacing it with the urban average land rent (Avgrent) for regression in column (1) of

Table 4. Robustness test result.

Variables	(1)	(2)	(3)	(4)
	OLS	SGMM	IV-2SLS
	CPI	CPI	First Stage	Second Stage
Avgrent	0.002 ***
	(0.000)
umdr		0.020 ***		1.183 ***
		(0.006)		(0.301)
L.CPI		1.052 ***
		(0.010)
avgslope			−0.075 ***
			(0.021)
Intercept	0.082 ***	0.001 *	1.401 ***	0.094 ***
	(0.011)	(0.001)	(0.380)	(0.022)
Control variables	All	All	All	All
Year fixed effects	YES	YES	YES	YES
Individual fixed effects	YES	YES	YES	YES
AR(1)-P		0.003
AR(2)-P		0.086
Hansen-P		0.365
Kleibergen-Paap rk LM statistic			11.15 ***	11.146 ***
Kleibergen-Paap rk Wald F statistic			10.40	10.402
Obs.	3920	3640	3920	3920
Adj R-squared	0.928		0.650	0.643

Notes: * and *** denote the significance levels of 0.1 and 0.01, respectively.

. The original explanatory variable characterizes the impact of urban rent from the perspective of relative disparity, while employing urban average land rent enables a reflection of the impact of urban rent on common prosperity in terms of absolute disparity. Secondly, we use the two-step system generalized method of moments (SGMM) to regress the model again in column (2), aiming to avoid reverse causality issues. All the results from columns (1) to (2) are consistent with the basic estimation results, indicating that our empirical research results are robust.

Endogenous robustness test. This paper attempts to introduce instrumental variables and use the two-stage least squares (2SLS) method for estimation to avoid endogeneity issues affecting the research results. The steepness of the terrain emerges as a pivotal factor influencing land supply and land transfer income, as highlighted by Chen and Kung (2016) [73]. The cost of urban construction on land with steeper slopes is higher due to the inherent difficulty in converting it into urban land, which restricts the supply of government land and affects the scale of government land finance, thus satisfying the correlation requirements of instrumental variables. Moreover, the urban geographic slope, being a natural geographical feature, is not directly related to the common prosperity of the city, confirming its exogenous nature. Therefore, the geographical slope is reasonable as a tool variable for UMDR. Given that geographic slope data is an inherent natural feature of provinces and remains constant over time, we follow the methods of scholars by introducing the interaction term between the original variable and the annual dummy variable as an instrumental variable into the model [74,75]. This approach overcomes the data dimension limitations of cross-sectional instrumental variables by incorporating variations in both dimensions. Additionally, it fully captures the impact of instrumental variables from different years on endogenous variables. Therefore, we multiply the urban geographic slope by the year to obtain an instrumental variable that varies over time and region. The results of the endogenous robustness test are presented in columns (3) and (4) of Table 4. The estimated coefficient of the instrumental variable in column (3) is negative and significant at a 1% confidence level, indicating a correlation between the instrumental and explanatory variables. The LM statistic value is 11.146, significant at the 1% level, demonstrating no problem of insufficient identification. Additionally, there is no weak instrumental variable issue, as the Wald F statistic value is 10.402 greater than the critical value of the Stock-Yogo weak identification test. Overall, the instrumental variables we adopted are appropriate, and the endogenous robustness test results further affirm the robustness of our empirical research findings.

5. Mechanism Analysis

We verify the impact mechanism of UMDR on common prosperity from the perspectives of urban prosperity and development achievement sharing, based on theoretical analysis and hypotheses in Section 2. The mechanism analysis results of the prosperity effect and sharing effect are detailed in

Table 5. Mechanism analysis results of prosperity effect.

Variables	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)	(13)	(14)
	PI	CPI	Economic	CPI	Transportation	CPI	Healthcare	CPI	Culture	CPI	Insurance	CPI	Ecology	CPI
umdr	0.221 ***	0.001 *	0.124 ***	0.194 ***	0.184 ***	0.081 ***	0.198 ***	0.144 ***	0.240 ***	0.064 ***	0.269 ***	0.070 ***	0.130 ***	0.208 ***
	(0.023)	(0.000)	(0.019)	(0.023)	(0.022)	(0.012)	(0.018)	(0.018)	(0.028)	(0.009)	(0.033)	(0.011)	(0.026)	(0.022)
PI		0.983 ***
		(0.001)
economic				0.182 ***
				(0.024)
transportation						0.742 ***
						(0.053)
healthcare								0.368 ***
								(0.030)
culture										0.640 ***
										(0.026)
insurance												0.548 ***
												(0.032)
ecology														0.071 ***
														(0.012)
Intercept	0.075 ***	0.004 ***	0.173 ***	0.047 ***	0.086 ***	0.014 **	0.077 ***	0.050 ***	0.056 ***	0.043 ***	0.060 ***	0.045 ***	0.970 ***	0.009 *
	(0.009)	(0.000)	(0.011)	(0.010)	(0.013)	(0.007)	(0.009)	(0.009)	(0.010)	(0.004)	(0.015)	(0.004)	(0.017)	(0.015)
Control variables	All	All	All	All	All	All	All	All	All	All	All	All	All	All
Year fixed effects	YES	YES	YES	YES	YES	YES	YES	YES	YES	YES	YES	YES	YES	YES
Individual fixed effects	YES	YES	YES	YES	YES	YES	YES	YES	YES	YES	YES	YES	YES	YES
Obs.	3920	3920	3920	3920	3920	3920	3920	3920	3920	3920	3920	3920	3920	3920
Adj R-squared	0.944	0.998	0.943	0.948	0.960	0.976	0.894	0.963	0.913	0.987	0.884	0.982	0.781	0.946

Notes: *, **, and *** denote the significance levels of 0.1, 0.05, and 0.01, respectively.

and

Table 6. Mechanism analysis results of sharing effect.

Variables	(1)	(2)	(3)	(4)	(5)	(6)	(7)
	SI	CPI	Regional	Urbrural	CPI	Individual	CPI
umdr	0.049 ***	0.214 ***	0.008	−0.017 ***	0.215 ***	0.052 ***	0.214 ***
	(0.016)	(0.023)	(0.008)	(0.005)	(0.022)	(0.017)	(0.023)
SI		0.058 ***
		(0.009)
regional					−0.129 ***
					(0.026)
urbrural
individual							0.055 ***
							(0.009)
Intercept	0.215 ***	0.066 ***	0.962 ***	0.955 ***	0.202 ***	0.169 ***	0.069 ***
	(0.014)	(0.010)	(0.012)	(0.004)	(0.027)	(0.015)	(0.009)
Control variables	All	All	All	All	All	All	All
Year fixed effects	YES	YES	YES	YES	YES	YES	YES
Individual fixed effects	YES	YES	YES	YES	YES	YES	YES
Obs.	3920	3920	3920	3920	3920	3920	3920
Adj R-squared	0.754	0.945	0.911	0.874	0.945	0.753	0.945

Notes: *** denotes the significance at the 0.01 level.

. Columns (1) and (2) of Table 5 and Table 6 display the regression results for urban prosperity level and development achievement sharing as intermediate variables. The coefficients of umdr are positive and significant at a 1% confidence level, signifying a significant positive influence of UMDR on urban prosperity and achievement sharing. Furthermore, the effect of UMDR on urban prosperity is markedly better than the development achievement sharing, with coefficients of 0.221 and 0.049, respectively. This observation suggests that local governments may not be sufficiently promoting balanced development alongside improving people’s material and spiritual well-being.

5.1. Prosperity Effect

In this paper, six dimensions of urban prosperity—economic development, transportation construction, medical and healthcare, public culture, social security, and ecology—are put into the model as intermediate variables. The results are shown in columns (3)–(14) of Table 5. Upon examination of the results in columns (3) to (14), we observe that common prosperity is significantly and positively correlated with economic development, transportation, healthcare, public culture, social security, and ecological civilization levels, consistent with previous scholarly findings [9,76]. Additionally, the coefficients of umdr are positive and statistically significant. This indicates that UMDR stimulates economic development, bolsters transportation infrastructure construction, improves the medical and health system, optimizes the supply of public cultural services, enhances social security levels, and advances ecological civilization, thereby fostering the improvement of urban common prosperity. Hypotheses 2a, 2b, and 2c are verified.

In summary, the research findings suggest that UMDR contributes to the augmentation of urban prosperity, which is beneficial for improving the common prosperity level. In detail, the influence of UMDR on common prosperity is primarily attributed to enhancements in economic development, transportation construction, healthcare services, public culture, social security, and ecological civilization levels.

5.2. Sharing Effect

We incorporate urban–rural sharing, regional sharing, and individual sharing, which are the dimensions of development achievement sharing, into the basic estimation model, as delineated in columns (3) to (7) of Table 6. Column (3) reveals the mechanism test results of the regional sharing, and the coefficient of umdr fails to pass the significance level test, indicating that the UMDR does not exert a significant influence on regional resource sharing. This finding indicates that higher UMDR does not ensure a city’s enhanced sharing of regional development benefits. The probable cause lies within China’s institutional framework, where top cities in most provinces hold significant resource advantages. This leads to a resource concentration in the most developed cities of each region, potentially overshadowing smaller cities. Despite increased urban land revenue, these resource imbalances might hinder equitable distribution and effective sharing of development gains.

The regression results in columns (4) and (5) present the coefficient of −0.017 for umdr, implying that an increase in UMDR reduces urban–rural disparities and improves sharing between these areas. Given that balanced urban–rural development is integral to common prosperity, raising UMDR likely boosts resource sharing, thereby raising overall common prosperity levels. Columns (6) and (7) demonstrate the mechanism test for individual sharing. The coefficient of umdr is significantly positive at the 1% confidence level, suggesting that the increase in UMDR strengthens the sharing among urban individuals. Research proves that UMDR promotes common prosperity by fostering increased resource sharing among individuals. Hypothesis 3a has not been verified, whereas Hypotheses 3b and 3c are confirmed.

Overall, our research demonstrates that UMDR has a positive impact on urban common prosperity by changing the level of development achievement sharing. Specifically, UMDR helps to achieve more equitable achievement sharing across urban and rural areas, as well as among individuals. It is noteworthy that UMDR does not, however, lead to an enhancement of resource sharing within the province.

6. Heterogeneity Effect

6.1. Regional Heterogeneity

Due to differences in locational conditions, resource endowments, and economic development levels, there may be regional heterogeneity in the impact of UMDR on common prosperity. We categorize the total sample into eastern cities and central–western cities according to the national geographical region division standards to scrutinize the heterogeneous impact of UMDR on the common prosperity level of cities in different regions.

Columns (1) to (6) in

Table 7. Heterogeneity analysis results.

Variables	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)
	Grouped by Geographical Region						Grouped by Industrial Structure
	CPI		PI		SI		CPI		PI		SI
	East	Central–Western	East	Central–Western	East	Central–Western	Service Cities	Industrial Cities	Service Cities	Industrial Cities	Service Cities	Industrial Cities
umdr	0.235 ***	0.141 ***	0.239 ***	0.144 ***	0.056 ***	0.010	0.281 ***	0.072 ***	0.285 ***	0.074 ***	0.086 ***	0.001
	(0.028)	(0.030)	(0.028)	(0.031)	(0.019)	(0.028)	(0.034)	(0.016)	(0.034)	(0.016)	(0.025)	(0.017)
Intercept	0.112 ***	0.058 ***	0.110 ***	0.054 ***	0.202 ***	0.214 ***	0.119 ***	0.059 ***	0.117 ***	0.056 ***	0.192 ***	0.208 ***
	(0.022)	(0.005)	(0.023)	(0.005)	(0.017)	(0.020)	(0.034)	(0.006)	(0.035)	(0.006)	(0.027)	(0.019)
Control variables	All	All	All	All	All	All	All	All	All	All	All	All
Year fixed effects	YES	YES	YES	YES	YES	YES	YES	YES	YES	YES	YES	YES
Individual fixed effects	YES	YES	YES	YES	YES	YES	YES	YES	YES	YES	YES	YES
Obs.	1358	2562	1358	2562	1358	2562	1284	2636	1284	2636	1284	2636
Adj R-squared	0.946	0.941	0.945	0.941	0.843	0.636	0.952	0.944	0.951	0.943	0.842	0.752
p-value	0.408		0.410		0.000 ***		0.000 ***		0.000 ***		0.000 ***

Notes: 1. *** denotes the significance at the 0.01 level. 2. p-value is used to test the significance of intergroup coefficient differences, obtained through bootstrap 2000 times.

present the effects of UMDR on common prosperity, urban prosperity, and achievement sharing in the eastern and central–western regions. The results reveal a positive influence of UMDR on the common prosperity of cities in both the eastern and central–western regions, with notable variations in the extent of this influence. UMDR has a better driving effect on common prosperity, urban prosperity, and development achievement sharing in eastern cities. The government’s spatial zoning control over land, driven by scarcity and externalities of land resources, may explain this discrepancy [77]. In China, land use indicators serve as a policy tool for the country to control land use scale [78]. To balance the development between regions, the central government allocates construction land indicators to the central–western region, while tightening land supply in the eastern region [79]. The rapidly developing eastern region, marked by substantial demand for land supply and fewer available resources for development, experiences an escalation in urban land prices; the land element in this region has a more significant impact on economic and social development. Furthermore, we observe that for cities in the central–western region, UMDR has no significant impact on development achievement sharing. This divergence may be attributed to the relatively weak economic foundation in the central–western region, where local governments prioritize infrastructure construction, social development, and regional economic growth.

Research findings indicate that the marginal role of UMDR in promoting common prosperity in eastern cities surpasses that in central–western cities. The impact of UMDR in eastern cities on common prosperity is consistent with basic estimation results, while the government financial capacity created by UMDR in central and western cities has not yet effectively contributed to narrowing the gaps in regional development.

6.2. Industrial Structure Heterogeneity

Given variations in urban economic development models, levels of innovation, and the capacity to attract production factor clusters, there may be heterogeneity in how UMDR impacts the common prosperity of cities with different dominant industries. We partition the entire sample into two groups for comparative analysis to examine the heterogeneous impact of UMDR on the common prosperity level across cities with diverse industrial structures. This division is based on the ratio of the proportion of the tertiary industry to the proportion of the secondary industry. Cities with a ratio exceeding 1 are considered service-dominated cities, while others are labeled as industry-dominated.

The effects of UMDR on common prosperity, urban prosperity, and development achievement sharing in service-dominated and industry-dominated cities are listed in columns (7)–(12). The results indicate that the UMDR exhibits a more pronounced driving effect on common prosperity, urban prosperity, and development achievement sharing in service-dominated cities compared to industry-dominated ones. Service-dominated cities strategically leverage the employment, income growth, and industrial interaction effects of the service industry to propel economic growth, narrow regional development disparities, and ultimately, promote common prosperity [80]. The increase in UMDR is conducive to fully unleashing the dividends of the service industry to promote common prosperity, while the extensive industrial production in industry-dominated cities has resulted in environmental pollution and adversely affected the quality of life for residents, posing a challenge to achieving common prosperity [81]. Moreover, the UMDR in industry-dominated cities solely increases the level of urban prosperity, exhibiting no discernible impact on development achievement sharing. The development of industrialization has instigated profound societal transformations, concurrently amplifying regional development disparities evident in the economy, social welfare, infrastructure construction, and resource allocation.

It is noted that the impact of UMDR in fostering common prosperity is more pronounced in service-dominated cities compared to industry-dominated ones. In service-dominated cities, an elevation in UMDR is advantageous for boosting urban prosperity and facilitating the equitable sharing of development achievement, proving to be an efficacious means of attaining common prosperity. This paper advocates for expeditious industrial transformation and upgrading as a fundamental strategy for elevating the common prosperity level in cities dominated by industries.

7. Conclusions and Policy Implications

From the perspective of urban macro differential rent, this paper analyzes the impact of urban land revenue on common prosperity in a panel dataset covering 280 Chinese cities from 2007 to 2020. Within our sample, the spatiotemporal evolution of UMDR and common prosperity exhibits striking similarities. Empirical results further reveal a significant promotion of common prosperity by UMDR, where a 1 standard unit increase in UMDR corresponds to a 0.217 standard unit increase in the level of common prosperity. This growth is primarily driven by improvements in urban prosperity and development achievement sharing. UMDR positively impacts economic development, transportation infrastructure, healthcare, public culture, social security, and ecological civilization levels, thereby promoting urban common prosperity. It also contributes to the sharing of development achievements by facilitating more equitable sharing of achievements between urban and rural areas and among individuals. Nevertheless, UMDR falls short in promoting intra-provincial resource sharing. Furthermore, UMDR has a more significant driving effect on the common prosperity of eastern cities and cities dominated by the service industry.

Our study provides several policy implications. Firstly, to attain common prosperity, administrative bodies should maximize the benefits of UMDR. Our findings show that UMDR plays a pivotal role in stimulating economic growth, improving public services, and ensuring equitable distribution of development gains between urban and rural areas, thus aiding social equity. Therefore, local governments need to enhance urban allure to elevate land values and rents, effectively leveraging UMDR’s potential in generating income and applying threshold screening to consistently progress towards common prosperity.

Secondly, to ensure equitable advancement in common prosperity, the nation should implement specific policies aiding cities and regions with low UMDR, focusing particularly on central and western areas. Our findings suggest that while a higher UMDR bolsters common prosperity in cities, predominantly in eastern regions, it simultaneously disadvantages cities and regions with significantly low land rents. This imbalance could result in these areas falling further behind in achieving common prosperity. Consequently, the central government should offer special assistance, including fiscal transfers and investment incentives, to mitigate these disparities.

Finally, throughout the development of common prosperity, it is crucial to fortify regional resource-sharing mechanisms. Our research identifies limitations in facilitating regional resource sharing via UMDR; therefore, it is essential to establish and execute intra-provincial resource-sharing mechanisms. These should include fiscal redistribution and comprehensive regional development strategies, ensuring that the advantages of high UMDR in specific cities are extended to their neighboring areas.