Macro effects on the household formation of China's young adults – demographics, institutional factors, and regional differences

Abstract

Household formation, or the extent to which population is transferred into households, determines housing demand and reflects housing well-being. Young adults, who are new entrants to the housing market and sensitive to changing market conditions, have faced many challenges in China's fledging housing market. This paper examines trends in household formation from 1982 to 2005 using census data. Then, the 2005 One-Percent Population Survey data are used to study macro effects on the household formation patterns of the post-1970 generation (those aged 25–34 in 2005) throughout China. Household formation is measured using both headship and non-family headship rates. In contrast to those in industrialised countries, young adults in China become less likely to form independent households in time of rapid economic growth. When they do, they are more likely to form non-family households than before. Regional variations in household formation can be explained by several macro factors. Marriage rates are positively associated with headship rates, so is gender imbalance. There is a distinct pattern to the formation of non-family households, which reflects increasing mobility, labour migration, delayed marriage, and gender imbalance. Institutional and demographic forces, some of which are unique to China, are important factors in household formation.