Population Growth Across Chinese Cities : Demand Shocks, Housing Supply Elasticity and Supply Shifts

The population growth of a city is constrained by its housing supply. The growth occurs if the housing supply is elastic in response to urban demand shocks, if the supply shifts out, or if per-capita housing demand decreases. We use this framework to examine the growth of 85 Chinese cities between 1998 and 2004, focusing on the determinants of the supply elasticity. Both the supply shifts and the elasticity are major sources of cross-city variations in growth. The elasticity depends on the availability of infrastructure, the cost of redevelopment, and the income inequality in the city, but not on population density