Housing choice behavior of urban workers in China's transition to a housing market

Restoring demand for commodity housing is crucial for the success of housing reform in previously centrally planned economies; yet weaning workers away from publicly subsidized housing is a difficult task. Taking advantage of a unique survey, we show that the intention to buy commodity housing by Chinese urban workers is sensitive to various incentives, including housing mismatch, liquidity constraints, risk attitudes, access to publicly subsidized housing, and commodity housing prices. Our probit estimates indicate that the access to publicly subsidized housing is at least as important as the affordability of commodity housing in discouraging private home ownership. (C) 1999 Academic Press.