An Empirical Study On The Economic Effects Of China Housing Guarantee Policies

Housing is a basic material premise to the development of human civilization. In modern society, housing issues not only have important effect on the lives of individuals in many aspects, but also has far-reaching significance for the development of the whole society. Therefore, when a considerable number of people cannot live in a decent house, the government needs to help them. This is the reason for the existence of housing guarantee policies. Nowadays, the housing problem has a very important practical significance for China, and the study on China's housing guarantee policy has been a hot topic.There are two reasons for the government to provide housing guarantee policies:efficiency and equity. In terms of efficiency, due to the neighborhood effects of housing, the Government should try to improve the housing mobility of low-income population, to avoid the excessive gathering of the poor and huge negative externalities. In terms of equity, due to the special attributes of housing, the housing guarantee policies for low-income families will have a profound significance in the distribution of income.The economic effects of housing guarantee policies can be studied from two aspects:supply and demand. On the supply side, the project-oriented housing policy may crowd out private investment, cause spatial mismatch of labor market. On the demand side, due to the free choice of household consumption, tenant-oriented housing subsidies are more efficient than the project-oriented public housing, but they may cause a substantial increase in the price of the private rental market and transfer of housing guarantee policy benefits. For a long time, homeownership incentive policies caused a significant increase of homeownership rate in western countries; but at the same time, they produce a large amount of windfall effect. Therefore, we can see that both supply-oriented and demand-oriented housing policies are not perfect.Which policy is the best? Based on the review of the economic effects of housing guarantee policies, this study pointed out that the discussion of which housing policy is the best is essentially a misleading question, only according to local conditions, cooperate housing policies with each other, can they result in greater policy efficiency and fairness in the safeguards. For China, it is essential to develop the tenant-oriented housing subsidies and establish a plural housing guarantee policy system.In this study, we will take good advantage of China's macro data and micro data and establish empirical models to analyze the potential economic effects of housing guarantee policies in the housing market and labor market for China. This paper is divided into eight chapters, and a detailed study is organized as follows:The first chapter is a general overview of the research background, the significance of research, and then gives the research frame, research methods of this study. The second chapter is a review for the basis theoretical research Literature of housing guarantee policies. The third chapter is a review of the evolution process of Chinese housing guarantee policies.Chapter four is a empirical study on crowding-out effect of affordable housing to commercial housing and the low-income housing.In order to study the crowding-out effect and windfall effect of affordable housing, this chapter uses a panel data from1999to2010of provinces in China to establish a dynamic panel data model. The results indicated that:In the whole residential market,1units of affordable housing increase leaded to an increase of housing supply about0.3-0.4units, this means, other commercial housing was crowded out about0.6-0.7units. In the low-income housing market, an increase of affordable housing was crowded out the low-income commercial housing one by one. The distributional implication of the crowding out effect is:In the affordable housing recipients, about60%-70%families can afford to buy ordinary commercial housing, and almost all families are able to purchase low-income commercial housing. There is a huge windfall effect in the welfare allocation process of affordable housing.Based on chapter four, the fifth chapter studies the crowding-out effect of affordable housing to private commercial housing and the high-income housing. In this chapter, we use a panel data from1999to2010of thirty-five large and medium-sized cities in China to examine the crowding-out effect of affordable housing. Treating the residential market as a whole, the results indicated that:an increase of affordable housing was almost crowded out private housing completely. In order to consider the differences between private housings, using high income housing and ordinary commercial housing as dependent variable respectively, the results show that:the crowding-out effect of affordable housing on private housing is mainly through the one be one crowding-out effect on ordinary commercial housing, while the crowding-out effect of affordable housing on high income housing is very small.In chapter six we want to ask:Are homeowners really more unemployment? In order to verify the applicability of Oswald hypothesis in China, this chapter establishes simultaneous equations model by county data of the sixth nationwide population census to conduct an empirical research about the relationship between home-ownership, unemployment and wages. The empirical results show that:In the labor market with less mobility, homeownership might have a negative effect on unemployment and wages. In the labor market with high mobility, the overall effect of homeownership on unemployment becomes positive, and the negative effect on wages disappeared. Hence, there is no evidence to confirm the Oswald hypothesis using the sixth nationwide population census data of China.Chapter seven is an extension of the Oswald hypothesis, we studied the relationship between public housing and unemployment. Using CGSS2008data, this paper established a biprobit model to verify the influence of renting public housing to the unemployment and labor force exit probability of city workers. The empirical results show that, there is no evidence that renting public housing significantly increased the probability of being unemployed. However, further research on the public housing internal mechanism of the influence of labor fource was found:renting public housing significantly increased the probability of no longer work after be unemployed, which means, due to the negative incentive of public housing on the labor force participation, public housing will have a potential effect on the unemployment duration of city workers.Chapter eight is the conclusions and policy recommendations section of this study. In this study on the economic effects of china housing guarantee policies, we found that:First,1units of affordable housing crowded out about0.6-0.7units commercial housing; In the low-income housing market, an increase of affordable housing was crowded out the low-income commercial housing one by one. The crowding-out effect of affordable housing on private housing is mainly through the one be one crowding-out effect on ordinary commercial housing, while the crowding-out effect of affordable housing on high income housing is very small; There is a huge windfall effect in the welfare allocation process of affordable housing. Second, in the labor market with less mobility, homeownership might have a negative effect on unemployment and wages. In the labor market with high mobility, the overall effect of homeownership on unemployment becomes positive, and the negative effect on wages disappeared. Hence, there is no evidence to confirm the Oswald hypothesis using the sixth nationwide population census data of China. Third, there is no evidence that renting public housing significantly increased the probability of being unemployed. However, renting public housing significantly increased the probability of no longer work after be unemployed, that means, due to the negative incentive of public housing on the labor force participation, public housing will have a potential effect on the unemployment duration of city workers.Finally, in the policy recommendations section, we believe that China's housing guarantee policies system should make some adjustment and improvement in the planning and construction, distribution management, financial support, tax policy and legal protection.