Spatial Price Differences and Inequality in the People's Republic of China: Housing Market Evidence

Chao Li () and John Gibson

Asian Development Review, 2014, vol. 31, issue 1, 92-120

Abstract: The large literature on regional inequality in the People's Republic of China (PRC) is hampered by incomplete evidence on price dispersion across space, making it hard to distinguish real and nominal inequality. The two main methods used to calculate spatial deflators have been to price a national basket of goods and services across different regions in the country or else to estimate a food Engel curve and define the deflator as that needed for nominally similar households to have the same food budget shares in all regions. Neither approach is convincing with the data available. Moreover, a focus on tradable goods such as food may be misplaced because of the emerging literature on the rapid convergence of traded goods prices within the PRC that contrasts with earlier claims of fragmented internal markets. In a setting where traded goods prices converge rapidly, the main source of price dispersion across space should come from nontraded items, and especially from housing given the fixity of land. In this paper we use newly available data on dwelling sales in urban PRC to develop spatially-disaggregated indices of house prices which are then used as spatial deflators for both provinces and core urban districts. These new deflators complement existing approaches that have relied more on traded goods prices and are used to re-examine the evidence on the level of regional inequality. Around one-quarter of the apparent spatial inequality disappears once account is taken of cost-of-living differences. © 2014 Asian Development Bank and Asian Development Bank Institute.

Keywords: housing; inequality; prices; spatial; China (search for similar items in EconPapers)
JEL-codes: E31 O15 R31 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

Downloads: (external link)
http://www.mitpressjournals.org/doi/pdf/10.1162/ADEV_a_00024 link to full text PDF (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:tpr:adbadr:v:31:y:2014:i:1:p:92-120

Access Statistics for this article

Asian Development Review is currently edited by Yasuyuki Sawada and Naoyuki Yoshino

More articles in Asian Development Review from MIT Press
Bibliographic data for series maintained by The MIT Press ().