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Does real estate expansion hurt manufacturing employment: Evidence from China

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  • Rong, Zhao
  • Wang, Wenchun
  • Zhang, Jiaxing

Abstract

Using a balanced panel of manufacturing firms in China’s 70 major cities from 2000 to 2009, we find that real estate expansion reduced manufacturing employment. To address endogeneity, we adopt an instrumental variable approach, using province-level land supply as an instrument for real estate expansion. The adverse effect on manufacturing was stronger among privately owned firms and those in eastern and central cities, and it held regardless of firms’ reliance on low-educated workers or their exposure to the real estate sector. We argue this impact stemmed from rising wage costs. Finally, we explore the role of labor market segmentation, showing that real estate expansion has little effect on resident workers’ job choices.

Suggested Citation

  • Rong, Zhao & Wang, Wenchun & Zhang, Jiaxing, 2026. "Does real estate expansion hurt manufacturing employment: Evidence from China," Labour Economics, Elsevier, vol. 100(C).
    • Handle: RePEc:eee:labeco:v:100:y:2026:i:c:s0927537126000412
    DOI: 10.1016/j.labeco.2026.102889
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