When Administrative Reform Misleads: Reclassification and Artificial Urbanization Signals in Provincial Economic Structure—Evidence From Türkiye

ABSTRACT

This paper examines how administrative reclassification can distort empirical inferences regarding the relationship between urbanization and provincial economic structure, using Türkiye's Law No. 6360 as an institutional setting. The reform redefined rural settlements as urban within newly designated metropolitan provinces, introducing a sharp discontinuity in official urbanization statistics without a contemporaneous change in provincial economic structure. We therefore construct a continuity‐adjusted urbanization measure that removes the administrative break while preserving temporal comparability. Using provincial panel data for 2007–2023 and two‐way fixed‐effects models, we compare estimates based on official and continuity‐adjusted urbanization measures. The results reveal a boundary‐driven measurement effect: reform‐induced increases in measured urbanization generate apparent patterns of industrial decline and service‐sector expansion. These relationships are substantially weakened when the continuity‐adjusted measure is used. Placebo analyses using unaffected provinces are consistent with the interpretation that these differences in estimated relationships are associated with administrative reclassification rather than underlying economic dynamics. The findings demonstrate how governance‐driven changes in spatial definitions can bias inference and lead to misinterpretation of urban development processes.