Chinese House Prices,Labor Costs,and Industrial Output

For a long time,as the leading industry of our national economy,industry has played an important role in China’s economic development.After the financial crisis in 2008,countries began to pay attention to the important position of the industrial industry in economic development,forming a global "re-industrialization" wave.After China’s economic development entered the new normal,economic growth slowed down,and the proportion of industrial output in the gross national product gradually decreased.In 2018,the proportion of industrial added value to GDP was only 33.9%.At the same time,the pillar position of China’s real estate industry in the economy has gradually become prominent.The real estate market has developed rapidly and the prices of commercial housing have been rising.By 2018,the price of commercial housing in China has risen to 8,736 yuan per square meter,which is 4.24 times that in 2000.Although the rapid development of the real estate industry has promoted China’s overall economic development,the excessive rise in housing prices may adversely affect economic development.With the gradual disappearance of China’s demographic dividend and the changing age structure of the population,the advantages of low labor costs continue to weaken.Laborers are important participants in economic activities,and housing is an important factor in labor reproduction.Rising house prices will inevitably affect laborers’ wage levels,and changes in wage levels will affect industrial production costs.Does the change in industrial output have anything to do with the rapid rise in housing prices? Through theoretical and empirical analysis,this paper studies the impact of housing prices on industrial output,and explores the mediating role of labor costs in this process.This has important practical significance for promoting the improvement of China’s industrialization level and maintaining the stability of China’s real estate market.According to the Cobb-Douglas production function,industrial output is mainly affected by factors such as labor,capital,and technology.The impact of housing prices on industrial output is two-way: the rise in housing prices promotes industrial output through industrial association effects,mortgage guarantee effects,and investment-driven effects;however,housing prices rise through resource mismatch effects,investment transfer effects,and costs rising effects inhibit industrial output.Regarding the mediating effect of labor costs,the rise in housing prices will increase the living costs,consumption costs and job search costs of labor,which will cause labor supply and demand contradictions,thereby increasing labor costs;the increase in labor costs will squeeze out industry consumption of goods has increased the expenditure of labor costs of enterprises,and the profit margin of enterprises has shrunk,which may reduce industrial output.This article uses panel data from 70 large and medium cities from 2004 to 2017 to construct a mediating effect model to explore the impact of housing prices on industrial output and the impact of housing prices on industrial output through labor costs.The full sample regression results show that the effect of house prices on industrial output is significantly negative,which suppresses industrial output,and the rise in labor costs has played a certain mediating role in it.The sub-sample regression results show that the rise in housing prices in first-tier and first-tier new cities and second-tier cities also inhibits industrial output,and at the same time,rising housing prices will adversely affect industrial output through labor costs;while in third-tier cities,because their own housing prices are not considered too high,house prices do not fluctuate greatly,and will be affected by the combination of factors such as industrial transfer and labor transfer,making the effect of house prices on industrial output not significant.In order to promote the stable development of the real estate industry and industry,the following measures can be taken: first,to save industrial enterprise costs from multiple angles,stabilize the price of industrial land,optimize the cost structure of enterprises,and make up for the impact of rising wage costs by increasing labor productivity;second,it is necessary to take measures in accordance with the city and alleviate the negative impact of rising house prices on industrial output based on the actual economic development in various places;third,promote the reform of the industrial innovation system and improve the level of industrial technological innovation;fourth,accelerate the construction of a long-term mechanism for the real estate market,stabilize the real estate market.