Wealth, labor supply and life satisfaction: The case of urban housing demolition in China

Feng, Lu; Xiao, Jing Jian; Cai, Feiying

doi:10.1016/j.econlet.2019.108597

Cited by 13 publications

(15 citation statements)

References 8 publications

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“…The most close to our paper is Li et al. (2019), who estimate only the short‐term effects of urban housing demolition. Compared to short‐term impact, medium‐ and long‐term impact may be more valuable.…”

Section: Introductionsupporting

confidence: 66%

“…First, we examine how housing demolition affects labor supply over time by exploiting panel data. The most close to our paper is Li et al (2019), who estimate only the short-term effects of urban housing demolition. Compared to short-term impact, medium-and long-term impact may be more valuable.…”

mentioning

confidence: 72%

“…Unlike public housing demolition without compensation in developed countries, relocated households in China can obtain a large sum as compensation, including money and new houses. Demolition compensation is considered a windfall gain in China and can lead to a significant increase in the wealth of relocated households (Li et al., 2019; Wu et al., 2013). As a wealth shock, housing demolition may affect labor supply, consumption, saving, and other household economic behaviors.…”

Section: Introductionmentioning

confidence: 99%

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Effects of housing demolition on labor supply: Evidence from China

Xue-cun

Liu

2022

Review Development Economics

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This paper investigates how housing demolition affects labor supply using the China Family Panel Studies, a nationally representative household survey from China. We argue that housing demolition is likely to be random across households within the same community. We find that housing demolition reduces overall labor force participation by ~3.3 percentage points and farm work participation by ~4.4 percentage points. We also find that the negative impact on labor force participation is mainly driven by older people, women, less‐educated people, and people living in rural regions. The negative impact of housing demolition on labor force participation persists over time.

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Section: Introductionsupporting

confidence: 66%

mentioning

confidence: 72%

Section: Introductionmentioning

confidence: 99%

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Effects of housing demolition on labor supply: Evidence from China

Xue-cun

Liu

2022

Review Development Economics

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“…The unique case of urban housing demolition (UHD) in China offers several advantages when examining this explanation. First, thanks to the real estate boom, Chinese UHD resulting from large-scale urban renewal and real estate development could result in considerable economic compensation for affected households in the form of lump sums of money and real estate (Cai et al, 2018;Li et al, 2019). These financial windfalls for Chinese UHD households provide an opportunity to observe the significant wealth effects in China, namely, the association between household wealth growth and children's human capital.…”

Section: Introductionmentioning

confidence: 99%

Losing the future: Household wealth from urban housing demolition and children's human capital in China

Feng¹,

Xiao²

2020

China Economic Review

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Some literature observes the negative but not very significant effect of household wealth growth on children's educational outcomes. This surprising finding is not easily reconciled with the traditional explanation that relaxed economic constraints caused by wealth growth can promote human capital accumulation. This paper proposes an alternative explanation for the causal relationship between wealth growth and human capital, which could be negative: individuals tend to reduce human capital investment following the decline in their labor supply induced by wealth growth, given that investing in human capital is mainly for employment competitiveness. This explanation is supported by evidence from the case of urban housing demolition in China, in which affected households could obtain substantial wealth growth by considerable demolition compensation thanks to the real estate boom in China. Specifically, using two nationally representative datasets, we find that Chinese households that have experienced demolition relatively have more wealth, less labor supply, lower propensity to accumulate children's human capital, and consequently, have children with lower educational achievement. These results suggest that China's economy may be losing its momentum because of the decline in labor supply and human capital accumulation brought about by the ongoing large-scale urban housing demolition.

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“…Since the reform and opening up, with the development of the economy and society in China, the number and scale of house demolition have become larger. House demolition refers to the needs for national construction, urban renovation, city appearance rectification, and environmental protection; the construction unit or an individual demolishes the houses on the existing construction land, relocation, and resettlement of house owners or users, and gives relatively large amounts of economic compensation as appropriate 1 (Wong, 2015;Cai et al, 2018;Li et al, 2019). Compared with the regular income of people, the demolition compensation is more likely to be regarded as irregular and unexpected income (Li and Xiao, 2020).…”

Section: Introductionmentioning

confidence: 99%

How Does House Demolition Affect Family Conspicuous Consumption?

Wei¹,

Gong²,

Gao³

2021

Front. Psychol.

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Family conspicuous consumption behavior is affected by many factors. Existing pieces of literature seldom focus on the impact of house demolition on family conspicuous consumption and its underlying mechanism. Based on the mental accounting theory and conservation of resources theory, this study uses the micro-data of the 2011 China Household Finance Survey to empirically examine the relationship between house demolition and family conspicuous consumption. Robustness results suggest that house demolition positively affects household conspicuous consumption, which is not only reflected in the overall consumption level but also in the level of average consumption. Further analysis finds that household wealth and materialism value have a significant positive moderating effect on the relationship of the main effect. In addition, in order to clarify the relationship between conspicuous consumption and luxury consumption, this study finds that conspicuous consumption and luxury consumption are not completely equivalent through in-depth theoretical analysis and exploratory investigation. There are similarities in both consumption motivation and pattern, but with differences on consumer subject and object. The contribution of this research is to enrich the theory of decision-making in consumer behavior, which also has certain significance in deepening the understanding of the relationship between conspicuous consumption and luxury consumption.

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Wealth, labor supply and life satisfaction: The case of urban housing demolition in China

Cited by 13 publications

References 8 publications

Effects of housing demolition on labor supply: Evidence from China

Effects of housing demolition on labor supply: Evidence from China

Losing the future: Household wealth from urban housing demolition and children's human capital in China

How Does House Demolition Affect Family Conspicuous Consumption?

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