The impact of housing reform on durables consumption in China

Abstract

The privatization of public housing in the 1990s in China had a considerable impact on the wealth of urban households. This paper analyzes the effects of the wealth change on household consumption of nine durable goods in urban China, including air conditioner, computer, color TV, washing machine, refrigerator, camera, microwave, telephone, and VCD/DVD. Our results show that households affected by the housing reform had a significantly higher level of durables consumption than those unaffected by the program. In the short term, their probabilities of purchasing air conditioners and computers increase by 2%–10% and 2%–7% respectively. In the long term, the effect on air conditioner consumption increases over time during our study period but effect on computer does not increase monotonically. Further, the effects of the housing reform on the consumptions of more commonly owned durables, such as color TV, washing machine, refrigerator, and telephone have diminished over time.