Housing prices, migration, and self-selection of migrants in China

Abstract

The relationship between housing prices and population migration is a crucial and heated topic worldwide. However, few studies discussed how housing price influences the skill composition of migrants. This paper aims to bridge this knowledge gap to investigate China's internal migration, theoretically and empirically. The research question is: Has a higher price crowded out low-skilled migrants and thus led to a positive selection of migrants? To address it, this study introduces housing costs into the self-selection model of migration to conduct a theoretical analysis. Then, this study develops an empirical model that estimates the effect of housing prices on migrants' skill levels, utilizing the China Migrants Dynamic Survey (CMDS) data in 2017 and other relevant data sources. Our analysis demonstrates that a 1% increase in housing prices gives rise to an extra 0.297 years of schooling among migrants. This implies that a higher housing price has significantly discouraged low-educated migrants. Such education selection is more significant among young migrants who live in rental or self-purchased accommodation and work with private enterprises. Also notable is the severer positive selection of migrants who intends to settle in the migrant cities. This study has shed light on the uneven conditions of migrants under the influence of housing unaffordability with policy implications.