Household Migration and Collateral Constraint: Cash-based Housing Resettlement in China

Zhiguo He (), Zehao Liu, Xinle Pang, Yang Su and Kunru Zou

No 34982, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Collateral constraints limit household migration to expensive locations by restricting financing for home purchases. Such endogenous location choice amplifies the impact of relaxing household borrowing constraints. Using China’s cash-based shantytown renovation program (2015-2018) as a natural experiment, we provide evidence that cash resettlement—by converting illiquid shanty houses into cash—facilitated household location upgrading and raised house prices in more expensive locations. A dynamic spatial model with collateral constraints confirms household migration responses to the cash transfer. Quantitatively, endogenous migration amplifies household housing expenditure responses by around 40%, and is able to explain more than 20% of the housing price growth in 2016-2020.

JEL-codes: D15 D50 G0 R0 (search for similar items in EconPapers)
Date: 2026-03
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