We examine the role of local public good provision in shaping the spatial structure of a city in terms of income sorting. Using the street neighbourhood (Juweihui) data from the 2007 Chinese Urban Household Survey, we find considerable variation in income sorting across Chinese cities. We find the per capita level of local public good resources can have a significant effect in dampending income sorting, especially in cities with large household income dispersion. We also show that income sorting in excess of what is predicted by urban population density and income dispersion has an adverse effect on the equity of access to local public goods.

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