Abstract
<title>Abstract</title> <p>Krugman’s (1991) seminal core-periphery model predicts that economic growth is inherently spatially uneven. Agglomeration economies generate a self-reinforcing cycle of concentration, creating a persistent core-periphery structure that locks peripheral regions into relative backwardness. A central debate in regional science is whether policy interventions can break this core-periphery trap and reconcile aggregate growth with spatial equity. This paper exploits China’s National Return Migration Entrepreneurship Pilot Program (RMEPP) as a quasi-natural experiment to examine how returning human capital reshapes intra-county spatial structures. Drawing on panel data from 2,367 Chinese counties over 2005–2023, we construct an Inclusive Light Index (ILI) that integrates average nighttime light intensity (measuring economic density) and the Gini coefficient of light distribution (measuring spatial equity). Using a staggered difference-in-differences design, we find that the RMEPP significantly raises the ILI by 0.336 units on average. Decomposing this effect shows that the policy delivers a dual dividend, simultaneously boosting aggregate economic output and reducing intra-county spatial inequality, a result that challenges the conventional tradeoff between growth and inequality. Mechanism tests indicate that the spatial equalization effect operates through the narrowing of the urban-rural income gap, the activation of township-level consumer markets, and the upgrading of rural employment structures. We further demonstrate that digital infrastructure functions as a critical spatial equalizer, amplifying the policy’s inequality-reducing effect by 7.5% for each standard deviation increase in broadband penetration. Heterogeneity analysis uncovers a clear regional gradient. The impact is strongest in central China, moderate in western China, and negligible in eastern and northeastern China, reflecting systematic differences in development stages and initial spatial structures. This study contributes to regional science theory by providing causal evidence that place-based human capital policies can break the core-periphery trap at the county level, and it offers generalizable insights for designing inclusive regional development strategies in developing countries.</p>