Summary:
House prices in China are rapidly increasing.The negative impacts of high house prices on economic and social development have been well documented. Many studies have focused on the consequences of this trend for the real economy, consumption, enterprise innovation, financial risks, investment, and so forth. At the same time, China is transforming itself from an economy based on a large population to one based on human capital, which is to say from a factor-driven to an innovation-driven economy. Human capital has become one of the most important sources of economic and social development. College graduates are an important element of high-skilled human capital, and are thus essential for urban innovation. Due to the rapid rise in house prices, an increasing number of college graduates are choosing to leave first-tier cities. Thus, it is important to ask whether the increase in house prices has triggered an outflow of talent, especially high-skilled talent. This paper uses representative national survey data on college students from 2010 to 2015 to study the impact of increasing house prices on the outflow of college graduates. We further use a measure of per capita land transfer area as an instrumental variable for estimation. Our findings are as follows. First, a substantial rise in house prices significantly increases the probability that college graduates will choose to leave their current city for work. Second, regarding magnitude, if house prices increaseby 1,000 yuan, the probability that college students will choose to leave increases by 3.14%; this estimated coefficient indicates that the outflow of college graduates resulting from rising houses prices increased by 21.5% between 2010 and 2015. Third, heterogeneity analysis suggests that the effect is larger for students with less-advantaged educational and family backgrounds, and for those who study in second-and third-tier cities.Government support for emerging industries can, to some extent, reduce this crowding-out effect. Finally, we find that the substantial increase in house prices affects graduates' employment choices; specifically, more students tend to choose real estate and finance-related industries, and fewer choose fundamental industries. Our study makes two contributions to the literature. First, although a large strand of the literature examines the socioeconomic consequences of an increase in house prices, most previous studies focus on the direct impact of high house prices on aspects of economic and social development, such as consumption, investment, and firm performance. In contrast, few studies examine the impact of house prices on the outflow of human capital, especially high-skilled human capital. By focusing on college graduates, we propose an important channel through which the increase in house prices affects regional economic development.Second, this paper contributes to the literature on the determinants of human capital immigration. Several studies use data from other countries, such as the U.S., and explore determinants such as the nationwide economic situation and labor market demand. This paper provides new evidence from the perspective of house prices in China. Our findings also have three policy implications. First, our work confirms and quantifies the impact of high house prices on the outflow of high-skilled human capital resources. This provides a better understanding of the socioeconomic cost of excessive house prices. Second,the results of this study point to an important determinant of the flow of high-skilled human capital, which has become one of the most important sources of urban development. The unrestrained rise in house prices significantly increases living costs, which include the cost of housing at the present stage and the cost of buying a house in the future. Governments should consider relevant policies, such as providing public housing,“talent apartments,” and rental housing services, and regulating the rental housing market. Third, our instrumental variable regression shows that a decrease in land supply would significantly increase house prices and further increase the outflow of high-skilled talent. This suggests that to reduce the negative impact of house prices on the outflow of human capital, the government should reduce the distortion of house prices caused by land supply,ensure more flexible land management, and offer benefits for enhancing regional development.
宋弘, 吴茂华. 高房价是否导致了区域高技能人力资本流出？[J]. 金融研究, 2020, 477(3): 77-95.
SONG Hong, WU Maohua. Do Excessive Housing Prices Lead to an Outflow of Talent？. Journal of Financial Research, 2020, 477(3): 77-95.
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