Housing prices, rural-urban migrants' settlement decisions and their regional differences in China

Rural-urban migrants are the major group who will boost the transformation of China's urbanization and reform of the household registration system. Their aspirations of living in the immigration area are an important premise of institutional change. The housing prices within the immigration areas are an important factor that can influence the rural urban migrants' settlement decision. To what degree does the housing price influence the settlement decision? Do regional differences exist in the influence of house price? These issues need to be analyzed and verified in a theoretical and empirical ways. By introducing the variables of the housing price into the life-cycle theory function, we found that housing price influences the settlement decision through the welfare dissipation effect and the expected wealth effect. On the basis of welfare dissipation effect, hypothesis 1, we can come to the conclusion that high housing price will play a negative role in the process of settlement decision formation. Through expected wealth effect, hypothesis 2, we estimate that a housing price rise will promote the aspiration of living in the immigration area to some extent inversely. On this hypothesis basis, using the panel data model of China's 31 provinces and cities for the period 1995-2012, we found that, at the national level, the influence of housing price to the settlement decision is not significant. From the view of regional differences, the influence is negative in the eastern area, indicating that the welfare dissipation effect is greater than the expected wealth effect, in line with the hypothesis 1. The increase of housing prices will promote the settlement decision in the central area, this phenomena explains that the expected wealth effect is greater than the welfare dissipation effect, in line with the hypothesis 2. In the western area, the influence is non-significant. (C) 2015 Elsevier Ltd. All rights reserved.