November 2022

IZA DP No. 15750: Housing Demolition and Occupational Mobility: Evidence from China

Chuhong Wang, Yonghua Wang, Xingfei Liu, Jiatong Zhong

We identify the causal impact of housing demolition on employment and occupational mobility of working-age individuals in China. We exploit housing demolition events as a quasi-natural experiment and apply a two-way fixed effects approach to overcome the potential endogeneity problem. Using data from the CHFS, we find that on the extensive margin, housing demolition creates skill waste by making individuals less likely to work; while on the intensive margin, housing demolition leads to occupational upward mobility, especially among low-skilled workers. We do not find any empirical evidence that housing demolition influences internal migration flow or migrant workers' occupational mobility.