February 2016

IZA DP No. 9745: The Effect of Housing Wealth on Labor Force Participation: Evidence from China

Shihe Fu, Yu Liao, Junfu Zhang

published in: Journal of Housing Economics, 2016, 33, 59-69

This paper uses the 2011 China Household Finance Survey data to estimate the effect of change in housing value on homeowners' labor force participation. Using the average housing capital gains of other homes in the same community as an instrument for the housing capital gains of a given household, we find that a 100 thousand yuan increase in housing value leads to a 1.37 percentage point decrease in female homeowners' probability of participating in the labor force and a 1.49 percentage point increase in their probability of becoming housewives. We find little effect on men's labor force participation.