Housing allocations, imputed rents and inequality in urban China

This paper demonstrates that subsidized housing substantially increased inequality among urban Chinese residents in 1988 and 1995. Regressions for 1995 rental units impute estimated market rents in 1988 and 1995 for all dwelling units. In both years, these imputed values exceeded actual rents by a factor of more than ten. Estimated true household income, the sum of imputed net estimated market rent and total reported income, exceeded total reported income by approximately 23% in 1995. The Gini coefficient for true household income in 1988 was probably in the vicinity of .250, more than 20 % greater than the coefficient of .206 for total reported income. The Gini coefficient for 1995 was probably around .310, 11.1% greater than the reported value of .279. The contribution of imputed rents to inequality is much less in recent years, as urban housing has become more commodified. Consequently, the increase in urban inequality over the past 25 years has been less than that estimated on the basis of money incomes alone.