Public housing into private assets: Wealth creation in urban China |
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Institution: | 1. Department of Sociology, Building 120, Stanford University, Stanford CA 94305-2047, United States;2. School of Management, Fudan University, Rm. 405, Siyuan Building, 670 Guoshun Rd., Shanghai 200433, China;1. Department of Geography, Hong Kong Baptist University, Hong Kong;2. Humphrey School of Public Affairs, University of Minnesota, USA;1. School of Economics and Management, Zhejiang University of Technology, Hangzhou 310023, China;2. College of Economics and Management, Zhejiang University of Science and Technology, Hangzhou 310023, China |
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Abstract: | State socialist economies provided public housing to urban citizens at nominal cost, while allocating larger and better quality apartments to individuals in elite occupations. In transitions to a market economy, ownership is typically transferred to existing occupants at deeply discounted prices, making home equity the largest component of household wealth. Housing privatization is therefore a potentially important avenue for the conversion of bureaucratic privilege into private wealth. We estimate the resulting inequalities with data from successive waves of a Chinese national income survey that details household assets and participation in housing programs. Access to privatization programs was relatively equal across urban residents in state sector occupations. Elite occupations had substantially greater wealth in the form of home equity shortly after privatization, due primarily to their prior allocations of newer and higher quality apartments. The resulting gaps in private wealth were nonetheless small by the standards of established market economies, and despite the inherent biases in the process, housing privatization distributed home equity widely across those who were resident in public housing immediately prior to privatization. |
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Keywords: | Privatization Market transition Inequality Wealth |
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