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Department of Economics

Lund University School of Economics and Management

Growing inequality in China is shaped by the housing markets

Published: 2022-06-14

The Chinese economy as a whole has grown massively in the last 40 years, but it did not benefit the complete population equally resulting in increased inequality and potential social tensions.

A novel research paper shows that the housing markets are key to understanding this trend (Fischer, 2022). High housing prices in the prosperous urban areas hinder the internal migration that would allow workers to move from the less developed rural areas to the urban economic centers and hence to benefit from the overall growth trend. Moreover, rising housing prices increase inequality also within the city between migrants who rent apartments and their landlords. A model predicts that the pathway of future inequality will, to a large extent, be shaped by the housing markets.

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