Urban housing prices, female labor participation, and economic development in china: A theoretical and empirical analysis

Abstract

China's housing distribution system has undergone a major transformation, and the country's housing markets have experienced a rapid price increase. However, the extent to which urban housing prices influence female labor participation (FLP) in labor decision-making and how the FLP rate affects economic development has not been sufficiently investigated. Accordingly, we first build a theoretical neoclassical economic development model that includes housing consumption factors to estimate the effect of housing price dynamics on FLP. We then use the 2017 China Family Panel Studies (CFPS) database to empirically estimate the intrinsic relationship between urban housing prices, FLP, and economic development through the lens of the balanced growth path, and we come up with four main findings. First, the theoretical model demonstrates that rising housing prices increase FLP, stimulating economic development. However, an excessive increase in housing prices will undermine women's ability to drive economic development. Second, the empirical evidence shows that a unit increase in housing prices increases the probability of FLP by 0.186%. Third, the effects of housing prices on economic development vary across China's Eastern, Central, and Northeastern regions. Finally, the threshold model shows that FLP positively influences economic development until the housing price logarithm reaches 8.8134, after which FLP's beneficial effect on economic development will be diminished.