Working Paper: NBER ID: w28013
Authors: Carlos Garriga; Aaron Hedlund; Yang Tang; Ping Wang
Abstract: This paper uses a dynamic competitive spatial equilibrium framework to evaluate the contribution of rural-urban migration induced by structural transformation to the behavior of Chinese housing markets. In the model, technological progress drives workers facing heterogeneous mobility costs to migrate from the rural agricultural sector to the higher paying urban manufacturing sector. Upon arrival to the city, workers purchase housing using long-term mortgages. Quantitatively, the model fits cross-sectional house price behavior across a representative sample of Chinese cities between 2003 and 2015. The model is then used to evaluate how changes to city migration policies and land supply regulations affect the speed of urbanization and house price appreciation. The analysis indicates that making migration policy more egalitarian or land policy more uniform would promote urbanization but also would contribute to larger house price dispersion.
Keywords: Rural-Urban Migration; House Prices; China; Dynamic Competitive Spatial Equilibrium
JEL Codes: O11; R21; R23; R31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| rural-urban migration (R23) | increased house prices (R31) |
| migration policy adjustment (F22) | urbanization rates (R11) |
| urbanization rates (R11) | house price dynamics (R31) |
| land supply regulations (R52) | house prices (R31) |
| rural-urban migration (R23) | demand for housing (R21) |
| demand for housing (R21) | increased house prices (R31) |