The misallocation in the Chinese land market

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dc.contributor Bank of Finland Fei, Xuan 2020-10-21T10:04:58Z 2020-10-21T10:04:58Z 2020
dc.identifier.isbn 978-952-323-351-5
dc.identifier.issn 1456-5889
dc.description.abstract This paper proposes a spatial equilibrium model to quantify welfare losses from land market distortions in China. In the model, heterogeneous firms in a variety of sectors choose their locations across regions with costly trade, frictional labor migration, and land market distortions. We match land transaction and firm-level survey data to estimate land market distortions for firms. Misallocation arises when similar firms are faced with land prices that effectively prevent productive firms from establishing in large cities where they can benefit from agglomeration forces and access to higher productivity. Our framework incorporating land market distortions also helps clarify the mystery of China’s undersized cities, a phenomenon noted by Au and Henderson (2006) and Chauvin et al. (2017). Our estimates suggest large negative effects of land policies on the economic welfare in China. We end with a counterfactual exercise that suggests that a coordinated land and labor migration reform would generate welfare gains and reduce regional inequality.
dc.format.extent 57
dc.language.iso ENG
dc.subject Bofit-kokoelma
dc.subject Kiina
dc.subject.other misallocation
dc.subject.other agglomeration
dc.subject.other firm behaviors
dc.subject.other land
dc.subject.other productivity
dc.subject.other city
dc.subject.other China
dc.title The misallocation in the Chinese land market
dc.type Paper
dc.identifier.urn URN:NBN:fi:bof-202010212445
dc.subject.jel F16
dc.subject.jel L22
dc.subject.jel L51
dc.subject.jel O47
dc.subject.jel R14
dc.subject.jel R30 BOFIT Discussion Papers
dc.series.year 2020
dc.series.number 23/2020
dc.series.sortingnumber 0023 21.10.2020
dc.subject.yso tuottavuus
dc.subject.yso alueet
dc.subject.yso kaupungit (hallintoalueet)
dc.subject.yso maa-alueet
dc.subject.yso maankäyttö
dc.subject.yso maanhinta
dc.subject.yso yritykset
dc.subject.yso sijainti
dc.subject.yso tehokkuus
dc.contributor.orgunit Institute for Economies in Transition (BOFIT)
dc.type.okm D4

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