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The nexus between labor wages and property rents in the Greater China area

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  • Chong, Terence Tai-Leung
  • Shui, Kenny Chi-Wai
  • Wong, Vivian H.

Abstract

Tse and Chan (2003) investigated the relationship between property sales price and the value of commuting time without accounting for the fact that property sales price is subject to the inherent limitation of containing speculative elements. A better measure to use for such a study would be the rent paid by the genuine end-user of the property. This paper examines how equilibrium rents in different locations within Greater China are determined by the time value, or the shadow wage, of an individual. Using the rental information, we provide the first estimated ratio of time values for individuals in Hong Kong, Shanghai and Taipei. Our results show that the shadow wage ratio of the households in Hong Kong, Shanghai and Taipei is about 2.25:1:1.61.

Suggested Citation

  • Chong, Terence Tai-Leung & Shui, Kenny Chi-Wai & Wong, Vivian H., 2014. "The nexus between labor wages and property rents in the Greater China area," China Economic Review, Elsevier, vol. 30(C), pages 180-191.
  • Handle: RePEc:eee:chieco:v:30:y:2014:i:c:p:180-191
    DOI: 10.1016/j.chieco.2014.06.010
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    References listed on IDEAS

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    1. Heckman, James J, 1974. "Shadow Prices, Market Wages, and Labor Supply," Econometrica, Econometric Society, vol. 42(4), pages 679-694, July.
    2. Bruce E. Hansen, 2000. "Sample Splitting and Threshold Estimation," Econometrica, Econometric Society, vol. 68(3), pages 575-604, May.
    3. McMillen, Daniel P. & Singell, Larry Jr., 1992. "Work location, residence location, and the intraurban wage gradient," Journal of Urban Economics, Elsevier, vol. 32(2), pages 195-213, September.
    4. Nelson, Jon P., 1978. "Residential choice, hedonic prices, and the demand for urban air quality," Journal of Urban Economics, Elsevier, vol. 5(3), pages 357-369, July.
    5. Eurostat, 2013. "Handbook on Residential Property Prices Indices," World Bank Publications, The World Bank, number 17280, May.
    6. Brent L. Mahan & BStephen Polasky & Richard M. Adams, 2000. "Valuing Urban Wetlands: A Property Price Approach," Land Economics, University of Wisconsin Press, vol. 76(1), pages 100-113.
    7. Tse, Chung Yi & Chan, Alex W. H., 2003. "Estimating the commuting cost and commuting time property price gradients," Regional Science and Urban Economics, Elsevier, vol. 33(6), pages 745-767, October.
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    Cited by:

    1. Wang, Yiming & Feng, Suwei & Deng, Zhongwei & Cheng, Shuangyu, 2016. "Transit premium and rent segmentation: A spatial quantile hedonic analysis of Shanghai Metro," Transport Policy, Elsevier, vol. 51(C), pages 61-69.

    More about this item

    Keywords

    Shadow wage; Property rental price; Central business district;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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