LATENT DEMAND FOR URBAN HOUSING IN THE PEOPLES-REPUBLIC-OF-CHINA

A new micro-data set demonstrates that, in urban China, own-built dwel lings are 75% larger than state-owned dwellings. A switching regressio n with endogenous switching demonstrates that families with less privi leged positions in the Chinese economy are more likely to inhabit own- built housing. The relationships between family characteristics and dw elling sizes in the own-built and state-owned sectors differ dramatica lly. However, unobserved characteristics, probably including guanxi, p lay crucial roles in both. Depending on these characteristics, familie s in state-owned dwellings might have two-thirds more living space wer e they to choose own-built dwellings. (C) 1997 Academic Press.