How does administrative restructuring affect wage income?

Wage income constitutes a fundamental benchmark for evaluating the quality of regional development and serves as a crucial indicator for retrospectively assessing the effectiveness of administrative division adjustments. This study utilizes the new round “county-to-city” policy as a quasi-natural experiment, employing a difference-in-differences approach to investigate the impact and mechanisms of administrative division adjustment policies on wage income. The results demonstrate that the implementation of the “county-to-city” policy significantly increases wage income. This policy fosters wage income growth through two primary channels: attracting investment to create jobs, and improving human capital by developing education. Furthermore, the effectiveness of the policy exhibits regional disparities, with more pronounced effects observed in areas adjacent to urban centers and regions experiencing net population inflows. This study highlights how administrative division adjustments reshape public resource allocation, providing valuable insights for advancing county-centered urbanization.