Population Growth across Chinese Cities: Urban Land Expansion versus Housing Density Response to Demand Shocks

We study the extent to which responses in urban redevelopment density to demand shocks contribute to population growth, taking into account urban land expansions independent of demand shocks and changes in housing absorption by existing urban households. In the context of Chinese urban growth from 1998 to 2004 when liberalization in urban housing and labor markets significantly elevated labor mobility, we show that the variation in housing density response contributes as much to the cross-city population growth variance as do the variations in urban land expansion and per-capita housing demand growth. Furthermore, we find a number of institutional factors, such as local government efficiency, urban land reform and intra-city income inequality, to have significant influences on the housing-density supply elasticity.