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Housing Costs and Real Income Differences across Chinese Cities

Author

Listed:
  • Ziyang Chen

    (HKUST - Hong Kong University of Science and Technology)

  • Pierre-Philippe Combes

    (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, CNRS - Centre National de la Recherche Scientifique)

  • Sylvie Démurger

    (IAO - Institut d'Asie Orientale - ENS de Lyon - École normale supérieure de Lyon - UL2 - Université Lumière - Lyon 2 - IEP Lyon - Sciences Po Lyon - Institut d'études politiques de Lyon - Université de Lyon - CNRS - Centre National de la Recherche Scientifique, ENS de Lyon - École normale supérieure de Lyon, CNRS - Centre National de la Recherche Scientifique)

  • Xiuyan Liu

    (SEU - Southeast University = Dongnan Daxue = 东南大学)

Abstract

We document variations in real income for high-skilled and low-skilled households across Chinese cities. Using comprehensive data on land parcel transactions and survey data for land development and household expenditure, we compute a city-specific housing cost index and we assess how it varies across locations. All three components of housing costs –unit land prices, land share in construction, and housing share in expenditure– decrease from the city centre to the periphery, increase with city population, and decrease with city land area, as predicted by theory. Overall, housing costs in China are high and vary a lot across locations. Income gains outweigh housing costs when moving from small to larger cities. However, in the largest cities, housing costs start dominating, especially for low-skilled households, illustrating a bell shaped curve relationship between real income and city population in China.

Suggested Citation

  • Ziyang Chen & Pierre-Philippe Combes & Sylvie Démurger & Xiuyan Liu, 2024. "Housing Costs and Real Income Differences across Chinese Cities," Working Papers hal-04358027, HAL.
    • Handle: RePEc:hal:wpaper:hal-04358027
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-04358027v2
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