Does administrative division adjustment reduce air pollution? Evidence from city-county mergers in China

Administrative division adjustment plays a crucial role in transforming the spatial layout of cities and effectively contributes to green transformation and high-quality regional economic development. We empirically investigate the impact of administrative division adjustment, exemplified by city-county mergers (CCM), on air pollution using the difference-in-differences method. Our results demonstrate that CCM significantly reduces air pollution, which passes a series of robustness tests including heterogeneous treatment effect tests. Mechanism analysis reveals that CCM reduces air pollution by optimizing industrial structure, promoting market allocation, and constraining government size; geo-climatic conditions significantly moderate the haze reduction effect of CCM. Further analyses indicate that the haze reduction effect of CCM is more pronounced in the eastern and western regions, the southeast regions of the Hu Line, and non-resource-based regions. Moreover, CCM not only alleviates air pollution in border areas and mitigates the pollution boundary effect but also yields the social welfare effect. This paper provides valuable insights for maximizing the haze reduction potential of administrative division adjustment, understanding the role of Chinese-style decentralization in regional air pollution management, especially in border areas, and supporting the achievement of carbon emission reduction and sustainable development goals.