LAUSR

This article examines the socioeconomic impacts of the 2014 policy that imposed restrictions on new construction land in Chinese megacities, emphasising the pivotal role of quantitative land supply regulations in land allocation and industrial structural transformation. The policy restrictions on expanding construction lands likely prompted local governments in these megacities to prioritise reallocating land to the tertiary sector, which is recognised for its higher efficiency in land use. This study employs a synthetic control method to empirically assess the policy’s effects. The findings indicate that the policy significantly fostered the transition of both land and ISs towards the tertiary sector, particularly in megacities at the early stages of structural transformation. The mechanism analysis indicates that the primary economic benefits of the policy derive from industrial structural change, rather than improvements in intra-industry land use efficiency or changes in sectoral relative prices. Additionally, this article provides supporting evidence of the policy’s positive impact on sustainable development, demonstrated by improvements in income and reductions in environmental pollution. Nevertheless, it also highlights a potential risk of increased inequalities.