Universities and the Formation of Edge Cities: Evidence from China's Government-led University Town Construction

Abstract

This paper examines the localized effect of clusters of universities by exploiting a university town (UT) construction boom in China. We show that UT establishment has generated positive impact on local night-time light density and population concentration. The UT effect is much localized, and completely decays within 10 km. We emphasize the role of knowledge spillover and find that UT establishment has increased local human capital level. The number of high skill labors as well as high-tech firms has experienced higher growth in UT districts, as they benefited more from knowledge spillovers. Finally, we find that land prices in the UT have appreciated by 7%-12% using a unique dataset of land parcel transactions.