Housing Reform in Urban China: Efficiency, Distribution and the Implications for Social Security.

The authors investigate the distribution of a measure of housing consumption among public tenants in cities of two Chinese provinces using household survey data. They find the resulting distribution roughly consistent with the outcome of a market rental system for fixed supply and CES preferences. There is surprisingly little evidence of allocative inefficiency in the present bureaucratic allocation system. The authors estimate the possible effects of market-oriented housing reform. Under alternative assumptions about the system of cash transfers used to compensate for a move to market rents, they investigate the distributional impact of reform and the likely need for supplementary cash benefits for low-income households. Copyright 1995 by The London School of Economics and Political Science.