Household Migration and Collateral Constraint: Cash-based Housing Resettlement in China
Collateral constraints limit household migration to expensive locations by restricting financing for home purchases. This migration effect amplifies the impact of relaxing household borrowing constraints. Using China’s cash-based shantytown renovation program (2015-2018) as a natural experiment, we provide evidence that cash resettlement—by converting illiquid shanty houses into cash—facilitated household location upgrading and raised house prices in more expensive locations. A dynamic spatial model with collateral constraints confirms household migration responses to the cash transfer. Quantitatively, migration amplifies household housing expenditure responses by over 50%, and the program explains 16-33% of the abnormal house price growth in 2016-2020.
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Copy CitationZhiguo He, Zehao Liu, Xinle Pang, Yang Su, and Kunru Zou, "Household Migration and Collateral Constraint: Cash-based Housing Resettlement in China," NBER Working Paper 34982 (2026), https://doi.org/10.3386/w34982.Download Citation
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