Credit constraints, job mobility and housing markets in China

This dissertation investigates the economic implications of employer-provided housing in the state sector in China. In 1994, the Chinese government began to privatize state-owned housing by offering existing tenants the opportunity to purchase the homes at subsidized prices. I use the reform as a natural experiment to analyze how the creation of private property from state assets affected individual-level decisions in the labor market as well as aggregate dynamics in the housing market.;The second chapter provides new evidence on the impact of private property rights on an individual's decision to become an entrepreneur. I develop a model of job choices to understand how the institutional features of the Chinese housing market influenced individuals' decisions to engage in wage employment or entrepreneurship. The empirical results suggest that the property reform led to an increase in self-employment among individuals who received the opportunity to buy a state home.;The third chapter tests predictions of the theoretical model to empirically analyze two mechanisms through which the reform might have led to the increase in entrepreneurship. I find that the reform increased the ability of individuals to finance entrepreneurial ventures by allowing them to capitalize on the value of the real estate. In addition, the unbundling of housing benefits from state employment also contributed to the increase in entrepreneurship by facilitating labor mobility out of the state sector.;While the previous chapters consider the partial equilibrium effects of the reform, the final chapter considers the general equilibrium impact of the privatization of a large stock of public housing on housing prices. I develop a theoretical framework that links the pre-reform allocation of housing in the state sector with the sign and the magnitude the price effects of the reform. The results indicate that the increase in housing prices following the reform were driven by the degree of misallocation of state-subsidized housing prior to the reform.