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Demolition, housing lock-in, and labor migration

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  • Zhang, Yan
  • Ma, Shuang
  • Li, Ding

Abstract

This study examines an underexplored question of how housing demolitions influence internal labor migration in China amid slowing population growth and growing concern over workforce mobility. Using nationally representative micro-level survey data from 2013 to 2019 and leveraging housing demolition as an exogenous shock, we examine the relationship among demolition, homeownership, and labor migration. We begin by developing a two-stage discrete choice model to analyze household migration decisions, incorporating multiple dimensions, such as social network dependence, transaction costs, and emotional attachment. Our findings reveal that housing demolition significantly reduces the homeownership rate by 4.6 percentage points and increases the probability of urban registered labor outflow from counties by 7.4 percentage points. Importantly, these effects extend to both intra-provincial and inter-provincial flows, highlighting the role of demolition in reshaping the spatial distribution of labor. Mechanism analysis indicates a dynamic process: in the short term, demolition weakens households' attachment to housing, reducing the housing lock-in effect, while in the long term, compensation creates a wealth effect that alters household assets and influences migration decisions. Heterogeneity analysis further shows that demolition disproportionately constrains younger and lower-income households with fewer assets, underscoring unequal adaptability to forced relocation.

Suggested Citation

  • Zhang, Yan & Ma, Shuang & Li, Ding, 2025. "Demolition, housing lock-in, and labor migration," China Economic Review, Elsevier, vol. 94(PC).
    • Handle: RePEc:eee:chieco:v:94:y:2025:i:pc:s1043951x25002524
    DOI: 10.1016/j.chieco.2025.102594
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