Innovative city pilot policies, absorptive capacity, and urban total factor productivity: a difference-in-differences approach

This study examines the impact of innovative city pilot policies (ICPP) on urban total factor productivity (TFP) and explores the mediating role of absorptive capacity in the context of innovative cities pilot policies in China. Based on panel data of 281 cities in China during 2006–2018, we introduce a difference-in-differences approach to analyse whether ICPP have a facilitating effect on urban TFP. The results of the study are as follows. (1) ICPP significantly contribute to urban TFP. (2) The mediating effect shows that the construction of innovative cities can enhance the absorptive capacity of cities and then improve TFP. (3) There is significant heterogeneity in the construction of innovative cities with different urban forms.