Spatial Inequality and Housing in China
Posted: 25 May 2018 Last revised: 21 Jan 2021
Date Written: July 1, 2019
This paper discusses the role of housing for the structural transformation of an economy away from the agricultural to the manufacturing sector in a general equilibrium model. The model explains evidence from China (1978-2015). Due to the urban-rural wage gap there is domestic migration from the rural to the urban areas. The resulting increase in urban house prices can constitute an endogenous barrier to further urbanization. Despite massive growth the inequality of income is not on the decline. Increasing housing prices increase within-urban inequality and also lock in urban-rural wage differences. The calibrated model explains current and projects future development in China.
Keywords: China, structural transformation, urban-rural divide, regional migration, housing, inequality
JEL Classification: O18, R3, R12, D3, R23
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