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House Price, Consumption Power and Gap of Demographic Urbanization in China
Kong Yanfang
School of Economics, Shandong University of Finance and Economics, Jinan, China
Abstract: This paper investigates the gap of demographic urbanization arising from
the difference between rural residents who have migrated to cities and those who have
acquired urban citizenship in the process of China’s urbanization. The skyrocketing house
prices and insufficient household consumption power are key factors to the widening gap,
which had reached 18% in 2013. In order to explore this issue, by creating the basic model
and the model with interaction term, this paper has analyzed the relationship among house
prices, consumption power and gap of urbanization using the data of 31 provinces between
1999 and 2013 in China. Empirical result indicates that: there is a positive correlation
between the house prices and the gap of China’s demographic urbanization. However,
such a correlation is restrained by these rural migrants who rent houses in cities. For an
increase of house price by 1%, the gap of urbanization will widen by 1.05%. Although
rising urban consumption power of rural residents has increased the ratio of migration, the
lagged growth of consumption power has led to a widening gap of urbanization. Therefore,
the only way to effectively reduce the gap of demographic urbanization is to increase the
consumption power of migrant population and optimize consumption structure.
Keywords: gap of demographic urbanization, house price, consumption power
JEL Classification: J11, R23, R51
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