Spatial Inequality and Housing in China
63 Pages Posted: 27 May 2021 Last revised: 5 Dec 2022
Date Written: January 1, 2021
This paper investigates the evolution of inequality in China (1978-2015) through the lens of a dynamic spatial general equilibrium model with migration and capital formation. Due to an urban-rural income gap there is domestic migration from the rural to the urban areas which tends to reduce inequality. The resulting increase in urban house prices can, however, constitute an endogenous barrier to further urbanization. Increasing housing prices increase within-urban inequality between renters and landlords and also lock in urban-rural wage differences. The calibrated model explains current, and projects future, development in China.
Keywords: China, inequality, urban-rural divide, regional migration, housing
JEL Classification: O18, R3, R12, D3, R23
Suggested Citation: Suggested Citation