Unbundling Property Rights: Urban Housing Privatization and Labor Mobility in China

Sunday, February 1, 2009

This paper examines the effect of urban housing privatization on labor mobility in
China. The reform untied housing access from state sector employment and transferred
property rights from the state to individuals. We exploit city-speci…c timing of the
reform for identi…cation and show that the reform can explain approximately one-fourth
of the increase in urban labor supply for the private sector during 1986-2005. We do
not …find any effects on entrepreneurship, credit or consumption. This suggests that the
main impact of housing privatization was to decrease the opportunity cost of working
for the private sector.

Xin Meng
Lakshmi Iyer
Nancy Qian

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