Journal of Housing and the Built Environment (2021) 36:89–111

https://doi.org/10.1007/s10901-020-09740-w

ARTICLE

State, market, and family: housing inequality

among the young generation in urban China

Geng Niu1   · Guochang Zhao1

Received: 2 October 2018 / Accepted: 2 April 2020 / Published online: 13 April 2020
© Springer Nature B.V. 2020

Abstract
Housing is critical to people’s prosperity and wellbeing. In particular, housing status is
closely linked to young people’s life opportunities in many domains. With skyrocketing
housing prices in many cities, housing outcomes of the current young generation in China
are receiving increased attention. In this study, we examine the recent pattern of housing
inequality among the young generation in urban China based on a large-scale national rep-
resentative survey conducted in 2015, and we explore the importance of different types of
factors. From an intragenerational perspective, we investigate the relative strengths between
socialist institutions and market mechanisms. We also take into account the intergenera-
tional channel by studying the impact of family background variables. We find substantial
inequality in terms of home ownership, living space, and housing wealth among young
people. While market ability variables, such as income and education, significantly affect
housing consumption, institutional factors, such as the household registration (hukou) sys-
tem, work units, and administrative rank, still play important roles in contemporary China.
Furthermore, the impact of parental socioeconomic and political status is also nontrivial.
In particular, the hukou status of young people and their parents has a sizable impact on
housing consumption. China’s policymakers should pay more attention to the housing
needs of young people and take concrete measures to expand the equality of opportunities.

Keywords  Housing consumption · Housing inequality · Young generation · Persistence of

power · Market transition · Intergenerational transmission

1 Introduction

Housing is one of the most important component of household wealth in many coun-
tries, and housing inequality is one of the most significant aspects of social stratifi-
cation. During China’s transformation from a socialist planned economy to a market

* Geng Niu
g.niu@swufe.edu.cn
Guochang Zhao
guochangzhao@swufe.edu.cn
1
Research Institute of Economics and Management, Southwestern University and Finance
and Economics, Chengdu, China

13
Vol.:(0123456789)
 90 G. Niu, G. Zhao

economy, large-scale housing reform was undertaken and resulted in a rapid increase
in homeownership and housing wealth among households (Yi and Huang 2014). At the
same time, the distribution of housing has become increasingly uneven, attracting con-
siderable scholarly and social attention.
The housing difficulties of western young people have recently received considerable
scholarly attention in the literature (Hoolachan et al. 2017; Mckee et al. 2017; Sissons
and Houston 2019; Tomaszewski et  al. 2017). However, the housing problems of the
young generation are also current high profile social issues in China. Since the mid-
2000s, many Chinese cities have experienced more dramatic housing price surges than
they had in previous years. Consequently, the young generation in China, born after the
reform period (from 1978 on), is facing increasing challenges in meeting their hous-
ing needs. Housing status is closely linked to young people’s life opportunities in many
domains. Moreover, housing is an important asset for accumulating wealth, especially in
China where household investment channels are rather limited. Therefore, young peo-
ple’s housing trajectories have important implications for China’s socioeconomic strati-
fication in the long term.
Housing inequality research in the context of urban China was mainly guided by the
power persistence theory (Bian and Logan 1996) and the market transition theory (Nee
1989). The former proposes that institutional factors could have a long-lasting impact on
the allocation of resources during the transition process, while the latter suggests that as
reform deepens, market mechanisms gradually replace political power. Despite evidence of
the growing importance of market factors, such as income and education, in housing con-
sumption (Huang and Jiang 2009; Ren and Hu 2016), a substantial amount of studies have
provided support for power persistence theory in China’s housing market. For example,
during the privatization process, those households favored in the prereform system con-
verted their bureaucratic privileges into private wealth, mostly through subsidized public
housing purchases (Logan et  al. 1999, 2010). Even years after the housing reform, it is
found that socialist legacies, such as the household registration (hukou) system, work units,
and administrative rank, still largely define a families’ access to housing (Fu 2016; Huang
2013; Huang and Yi 2011).
To achieve a synthesis of the controversies revolving around the market transition the-
ory, Szelenyi and Kostello (1996) introduced the model of “socialist mixed economy”: the
authors identified three different types of market systems in the postsocialist states and clas-
sify China into the category of a socialist mixed economy, which features the coexistence
of market and redistributive mechanisms that underlies the stratification process. Some
recent studies on China’s housing inequality conform to this argument (He et al. 2017; Liu
et al. 2012). However, the market transition debates have not reached a consensus.
While the market transition debates focus on the intragenerational determinants of hous-
ing outcomes, the importance of intergenerational factors should not be overlooked. There
is a long tradition among sociologists and economists of examining the intergenerational
transmission of advantages (Charles and Hurst 2003; Torche 2015). The impact of fam-
ily background, referred to as intergenerational factors here, on young people’s housing
outcomes has recently been actively discussed in the context of western societies (Lee
et al. 2018; Spilerman and Wolff 2012). Intergenerational factors could also be important
in China. Given the skyrocketing house prices, family background might have become a
pivotal determinant of housing consumption for young people in contemporary China apart
from their own market abilities and political identities. However, the role of intergenera-
tional factors, such as family background, in young people’s housing outcomes in China
has not received enough scholarly attention.

13
State, market, and family: housing inequality among the young… 91

In this paper, we aim to examine the current conditions and determinants of housing
outcomes, as measured by ownership, living space, and housing wealth, among China’s
young generation and to explore the relative importance of state, market, and family fac-
tors. We find a substantial level of housing inequality among the young generation. Com-
pared with market ability variables, such as income and education, institutional factors,
such as the household registration (hukou) system, work units, and administrative rank,
still play a dominant role in housing consumption after three decades of housing reform.
In particular, the hukou status and the political position of their parents significantly affect
the young generation’s housing consumption. At the same time, market factors, especially
education and income, also significantly affect young people’s housing outcomes. There-
fore, our results seem to be consistent with the argument that China is still a socialist mixed
economy (Liu et  al. 2012; Szelenyi and Kostello 1996). In addition, our results confirm
the importance of taking intergenerational transmission into account. We find that, con-
trolling for young people’s own status, family background still exerts a nontrivial influ-
ence on young people’s housing outcomes. This finding also echoes the rising concern over
decreasing intergenerational mobility in reform-period China (Fan 2016).
The remainder of the paper is organized as follows. In Sect. 2, we introduce the insti-
tutional background and theoretical framework. Section 3 presents data and variable defi-
nitions. Section  4 shows housing inequality across different social groups using descrip-
tive statistics. In Sect. 5, we report the empirical results based on multivariate regressions.
Finally, in Sect. 6, we present the study’s conclusions.

2 Institutional background and theoretical framework

Prior to the economic reform of 1978 housing in China was largely assigned by the state
based on need for free or for low rent without ownership (Chen et  al. 2011; Tan et  al.
2015; Walder and He 2014). However, the welfare-oriented housing system put consider-
able financial pressure on work units and local governments, and this system encountered
serious problems, such as housing shortages and overcrowding (Fu 2016). Consequently,
reforms that aimed at building a market-oriented housing system and at encouraging pri-
vate ownership were gradually introduced from the 1980s onward. After several years of
trials, China’s State Council formally announced housing commercialization as the main
objective of urban housing reform in 1994 (Yang and Chen 2014). In 1998, the welfare-
oriented physical housing allocation in urban China was officially abolished and replaced
with monetary allocation (Logan et al. 2010). Since 2003 the housing marketization was
further accelerated (Yi and Huang 2014). Housing marketization has resulted into a surge
in private housing investment: From 1998 to 2010, private housing investment in China
increased from 208 billion yuan to 3.4 trillion yuan (Yi and Huang 2014).
After decades of housing privatization reforms in urban China (especially after 2003),
housing consumption has significantly improved. For example, according to the census
data, the homeownership rate in urban China has increased from 20% in the 1980s to above
82% in 2017, and per capita living space has increased from 4 to nearly 30 m2 (Huang and
Yi 2010). Housing has also become the dominant part of household assets, accounting for
three quarters of total household wealth in urban China in 2010 (Xie and Jin 2015). Mean-
while, many Chinese cities have experienced a dramatic and persistent increase in hous-
ing prices together with increasing land values (Chen et  al. 2011; Fu 2015). Given sky-
rocketing housing prices the Chinese government has recently started a variety of plans to

13
 92 G. Niu, G. Zhao

resolve problems of housing affordability, although progress is still limited (Huang 2013;
Wei et al. 2017).
Meanwhile, there are increasing scholarly and political concerns over housing inequal-
ity in China. An influential framework for understanding social stratification in postsocial-
ist societies is the market transition theory (Nee 1989, 1996; Tan et al. 2015). This theory
argues that the transition from redistribution to a market economy will transfer power from
redistributors to direct producers and increase the reward for individual productivity (Nee
1989, 1996). As human capital is among the best predictors of economic productivity in
modern societies, a natural prediction from the theory is that, in a market economy, the
return on human capital (i.e., education) is high (Nee 1996).
However, controversies remain over whether the importance of redistributive power has
faded in the postsocialist era. For example, the literature has found that former elites in the
socialist era enjoyed economic advantages during and after the transition periods in China,
Russia, and Hungary (Bian and Logan 1996; Gerber 2000; Ronatas 1994). As a result, the
market transition theory has been challenged by several competing theories, such as the
power persistence theory (Bian and Logan 1996; Gerber and Hout 1998) and the power
conversion theory (Ronatas 1994; Staniszkis 1991), which suggest that political privileges
in the socialist era may persist well into the process of market reform and can be converted
into material advantages.
Findings from previous studies about China’s housing inequality provide only limited
support for the market transition theory and seem to align better with the model of the
socialist mixed economy. On the one hand, scholars have found overwhelming evidence
that people who were favored in the socialist era still enjoyed great advantages in the early
stage of the housing privatization process. For example, those people often had the chance
to purchase private housing from their work units with large subsidies (Huang and Jiang
2009; Li and Yi 2007; Logan et  al. 1999, 2010; Sato 2006; Wang 2001). On the other
hand, a few recent studies have observed that some elements of the socialist institutions
have been replaced by market mechanisms to shape housing consumption patterns in urban
China (Huang and Jiang 2009; Liu et al. 2012).
We propose that some elements of the socialist institutions are still important in China’s
housing market. One of the most persistent elements of the socialist institutions in China
is the household registration (hukou) system (Li et  al. 2015).1 People with rural hukou
in cities, namely, rural–urban migrants, still face institutionalized obstacles to obtaining
resources, including housing (Tan et  al. 2015). First, rural–urban migrants are discrimi-
nated against in the urban labor market and are mostly hired in informal sectors that offer
low income, which makes it difficult for them to afford decent housing (Meng and Zhang
2001). Second, rural–urban migrants often face various housing transaction constraints
set by local governments and have long been excluded from almost all low-income hous-
ing welfare programs in cities (Deng et al. 2016; Huang 2013). Furthermore, due to their
mobile nature, many migrants are reluctant to spend their earnings on housing in their host
cities (Tao et al. 2015). As a result, it has been widely documented in the literature that peo-
ple with rural hukou tend to experience poor housing conditions in Chinese cities (Huang
and Tao 2015; Li and Zhang 2011; Niu and Zhao 2018b; Wang et al. 2010). Apart from the
urban–rural segmentation, there also exist disparities between local and nonlocal people
in urban China (Niu and Zhao 2018a). Since the late 1990s, due to the decentralization of

1
  Under the hukou system, each resident is assigned a hukou location and a rural or urban hukou classifica-
tion, which are normally inherited at birth from one’s parents (Li et al. 2010).

13
State, market, and family: housing inequality among the young… 93

fiscal and administrative powers, China’s municipalities have become more responsible for
providing urban welfare and services to people with local hukou (Huang et al. 2013). As
a result, people in many cities without local hukou have limited access to public services,
such as healthcare, pensions, and education (Wang et al. 2014; Wu 2013). In addition, in
recent years, people without local hukou have often faced strict housing purchase restric-
tions in host cities.2
Apart from the hukou system, some other institutional factors might also affect housing
consumption today. For example, although the public allocation of housing has long been
terminated in China, people with political and bureaucratic privileges, such as those in
the public sector and with cadre status, still have various forms of housing benefits; those
benefits include for example discounted purchase prices, favorable mortgage terms, easy
access to affordable housing, and high Housing Provident Fund (HPF) amounts (Fu 2016;
Ying et al. 2013).3 Although in theory the HPF is mandatory nationwide for all employees,
in practice people with stable employment in the public sector (e.g., government agencies
and state-owned-enterprises) are much more likely to be enrolled, and they also receive
more generous contributions from their employers (Burell 2006; Buttimer et al. 2004).
Overall, the market transition debates have led scholars to devote great attention to a
battery of market and institutional factors when studying housing consumption in contem-
porary China. However, the market transition debates tend to focus on intragenerational
determinants of socioeconomic outcomes, while overlooking intergenerational factors
(family background) that are also responsible for social stratification. The intergenera-
tional transmission of advantages is evident in many societies, as parental resources play
an important role in determining children’s economic welfare (Charles and Hurst 2003;
Conley 2001; Keister 2004; Prix and Pfeffer 2017). The importance of family background
on people’s social status and economic attainment in reform-period China has also been
confirmed in the literature, raising concerns about the growing inequality of opportunities
in China (Deng et al. 2013; Fan 2016; Gong et al. 2012; Yuan and Chen 2013; Zhang and
Eriksson 2010). Apart from its impact on income, family background can also have a sub-
stantial impact on the housing consumption of young people, as homeownership requires a
large financial investment and young people tend to lack savings (Helderman and Mulder
2007; Isengard et al. 2018; Lee et al. 2018; Spilerman and Wolff 2012).
Scholars and policy-makers in Western societies are becoming increasingly concerned
about young adults’ housing outcomes. For example, while the cohort of baby boom-
ers enjoyed a long period of economic prosperity and accumulated considerable housing
wealth, millennials have been confronted with a sluggish economy and high housing prices
(Ronald and Lennartz 2018). In addition, young people tend to suffer from impeded access
to credit, especially after the 2008 global financial crisis (Hochstenbach 2018). The 2014
Fannie Mae National Housing Survey revealed that half of young renters in the U.S. find
it difficult to raise money for a down payment and obtain a mortgage (Lee et al. 2018). As

2
  In response to rising public appeal for social integration and social inclusion, since the late 2000s the
Chinese government has initiated a variety of plans to alleviate the hukou problem and improve migrants’
housing conditions, though the effectiveness of those reforms remains in question (Huang et  al. 2013;
Huang 2013).
3
  Under the HPF program, employees contribute a specific percentage of gross salaries to their individual
HPF accounts and employers match with an equal amount. Employees enrolled in the HPF program can
withdraw money from their HPF accounts to pay for housing-related expenses such as home purchases,
home downpayments, mortgage payments, and home improvement. In addition, the HPF participants are
eligible for discounted mortgage loans.

13
 94 G. Niu, G. Zhao

a result, recent studies found that the home ownership rates of the young generation are
decreasing and young adults are experiencing housing difficulties in many western soci-
eties (Lennartz et  al. 2016; Myers et  al. 2019). According to the American community
survey, the homeownership rate of young adult households (with heads aged 25–34) in the
U.S. declined from 46.6 to 36.8% between 2005 and 2015 (Myers et al. 2019). Similarly,
according to data from the EU Statistics on Income and Living Conditions (EU-SILC),
between 2007 and 2011, the homeownership rate among 18–34-year-olds decreased by
10.2% (from 33.45 to 23.26%) in the UK, by 7.60% (from 38.93 to 31.34%) in Denmark,
and by 5.39% (from 40.05 to 34.67%) in the Netherlands (Lennartz et  al. 2016). Young
adults in many other European countries also experienced (smaller but still) nontrivial
declines in homeownership rates after the global financial crisis (Lennartz et  al. 2016).
Given this backdrop, recent studies suggest that family support is becoming increasingly
important for young adults’ housing consumption in many Western countries (Coulter
2018; Hochstenbach 2018; Mckee 2012).
Similar to their Western counterparts, young people in today’s China encounter increas-
ing problems in the housing market. For example, while the older cohort had enjoyed large
housing subsidies from the state, the postreform generation in China faces a highly com-
mercialized housing market. Moreover, after many years of housing booms, today’s young
people in China face unprecedentedly high housing prices (Huang 2013; Ying et al. 2013).
On the one hand, housing is becoming increasingly unaffordable in urban China for the
young generation. On the other hand, demand for housing is strong in China as housing
is becoming increasingly important for the well-being of young people (Chen et al. 2016;
Huang et al. 2015; Zhang et al. 2016).
Consistent with the literature regarding young adults’ housing outcomes in Western
societies, we would expect that family support is also a pivotal determinant of housing
consumption for young people in contemporary China. In fact, intergenerational support is
especially prevalent in East Asian societies due to the culture of filial piety (Campos et al.
2016; Forrest and Hirayama 2009). Chinese parents are generally supportive of children’s
needs, in particular after the implementation of the one-child policy. In the Western con-
text, parental education and occupational status are often employed as proxies for parental
resources. In China, parents’ positions in the socialist hierarchy are also important factors
that can influence young people’s housing outcomes. For example, families favored in the
socialist epoch acquired houses at lower costs in the early stage of housing reform and
subsequently found it easier to trade up in the housing hierarchy, enjoying a large wealth
increase due to the housing market boom in China (Logan et al. 2010). The wealth accu-
mulated by those families increases their ability to support the housing consumption of the
next generation. A few studies have recently touched on the importance of parental back-
ground on young people’s housing in China, but those were mostly based on small-scale
surveys and focused only on tenure choice (Deng et al. 2016; Li and Shin 2013; Or 2018;
Wang and Otsuki 2015).
This study investigates the patterns and determinants of housing consumption meas-
ured in different dimensions, including home ownership, living space, and housing wealth,
among the young generation in contemporary urban China based on a large-scale national
representative survey implemented in 2015. To shed light on the market transition debates,
we study the impacts of both market mechanisms and redistributive powers. Furthermore,
we also examine the influence of intergenerational factors, namely, parents’ education and
political status, on young people’s housing outcomes. We contribute to the literature by
providing a comprehensive and updated understanding of young people’s urban housing
consumption in China.

13
State, market, and family: housing inequality among the young… 95

3 Data and variable definitions

The data used for our analysis come from the China Household Finance Survey (CHFS)
project. The CHFS is a longitudinal nationwide survey project initiated by Southwestern
University of Finance and Economics in 2010, and the first wave of the survey was con-
ducted in 2011. The project employs a stratified, three-stage probability proportional to
size (PPS) random sampling design to collect nationally representative household-level
data. Our analysis is based on data from the third wave of the CHFS conducted in the sum-
mer of 2015, which covers 29 provincial units (except Tibet and Xinjiang), 363 counties,
and 1439 communities in mainland China.
The CHFS data collect rich information on housing conditions and housing wealth. The
data also include information on the demographic, socioeconomic, and political character-
istics of household members. Furthermore, the data collect information about the socio-
economic and political status of the parents of the main respondent of a household, no
matter whether the parents were co-residing with their children at the time of the survey.
This design is particularly useful as it mitigates the sample selection problem when we use
parents’ information in our study.
As the focus of the paper is on the young generation in urban China, we include in
our analysis only urban area households in which the respondent and their spouse (if the
respondent is married) were both between the ages of 18 and 40 and were not students
at the time of the survey. Furthermore, we restrict our sample to those households for
which information about the parents of the head of the household is not missing. The final
analysis sample includes 3375 urban households with non-missing values in variables of
interest.
We use four measures for housing consumption: home ownership (housing tenure), liv-
ing space per person, overcrowding, and housing wealth. Home ownership is measured by
a binary variable that equals one if the household owns the housing unit that it occupies,
and zero otherwise. Living space per person is measured in ­m2. Overcrowding is defined
as fewer than 8  m2 of living space per person. This measure of overcrowding has been
adopted by the existing literature to examine housing poverty in China (Zhang and Chen
2014). Housing wealth is defined as the self-reported total market value of houses owned
by a household. Housing wealth is treated as zero for households that did not own any
houses. To some extent, the self-reported housing value is a subjective estimate of the true
market value, but this is often the best that researchers can get from household surveys, and
we assume that the respondents have a reasonable knowledge of the market values of their
houses.
To comprehensively capture the features of housing differentiation among young peo-
ple in contemporary China, we include a battery of demographic, institutional, market,
intergenerational, and location-related variables as explanatory variables. Demographic
variables, such as the age, marital status, and parenthood status of the household head
are included to capture the housing demand associated with different life courses (He
et  al. 2017; Huang 2008). Institutional variables include hukou status, Communist Party
of China (CPC) membership, cadre status, and types of affiliation (He et al. 2017; Huang
and Yi 2010; Tan et al. 2015). We differentiate hukou status along two dimensions: rural
vs. urban and local vs. nonlocal. CPC membership is a typical measure of political status
in China (Walder and He 2014). We define cadres as administrators with official ranks in
government agencies and public institutions (Tan et al. 2015). Following the literature, we
classify types of affiliation into three categories based on a decreasing order of political

13
 96 G. Niu, G. Zhao

privileges in China; namely, government agencies and public institutions (Government,

hereafter), state-owned enterprises (SOE, hereafter), and private enterprises (Private, here-
after) (He et  al. 2017; Song and Xie 2014). Market variables include education level (in
terms of years of schooling), household income, and occupation rank (whether having
a managerial position), which reflect the level of human and economic capital (He et  al.
2017; Huang 2010; Liu et al. 2012). Including occupation rank as an explanatory variable
also helps distinguish redistributive power from managerial ability, as the variable cadre
status mentioned above might reflect both political privilege and managerial ability (Cao
and Nee 2000). It should be noted that it is controversial in the literature whether educa-
tion should be classified as a market variable in China. For example, some studies suggest
that education is also an important determinant of a person’s social status in a socialist
economy (Bian and Logan 1994; Li and Yi 2007; Szelenyi 1987). However, our data come
from a survey conducted almost four decades after China’s market reform, when education
largely reflects a person’s capability to access resources by market means. Another concern
is that because people with high human capital were more likely to work in the state sector
in China’s early reform era, returns on education reflect the hybrid effects of political pro-
cesses and marketization (Zhou 2000; Zhou et al. 1997). The fact that we have controlled
for the types of affiliation in our regression analysis should mitigate this concern to a large
extent. Therefore, to be consistent with the common practice in the recent literature (He
et al. 2017; Huang and Jiang 2009; Liu et al. 2012; Tan et al. 2015) and facilitate compari-
son of the empirical results, we still treat education as a market variable in our paper. For
young couples in our dataset, we compare the values of institutional and market variables
between husband and wife and choose the higher one, which better captures the character-
istics of the young generation than using the individual as the unit of analysis. Following
the existing literature on market transition debates, the institutional and market variables
we employ in our analysis are intragenerational factors. Drawing on the discussion in the
theoretical section, we should also take into account the role of intergenerational factors
in shaping social stratification. Based on data availability and previous literature (Li et al.
2012), we use education level, hukou status (only the rural/urban classification is used
in this case, as local/nonlocal information is not available for nonhousehold members),
and the cadre status of parents to proxy the level of parental resources. We only include
parental characteristics of the household head due to data availability. Finally, we include
location-related variables to account for the spatial variation of housing consumption (He
et al. 2017; Huang and Yi 2010). The location-related variables are a dummy variable that
indicates whether a household resided in the downtown area or not, as well as city-level
housing prices. Following the literature (Chow and Niu 2015), the city-level housing price
in China is measured by dividing total sales revenue of commercialized residential housing
by total floor space sold for a given city. We use 2015 house price to match the survey time.
Data on total sales revenue of commercialized residential housing and total floor space sold
are obtained from the China City Statistics Yearbook 2016 (National Bureau of Statistics
[NBS] 2016). Table 1 provides detailed definitions of explanatory variables.

4 Housing inequality across different social groups

We start by using descriptive statistics to depict housing consumption inequality across dif-
ferent groups of young households. Table 2 presents the results. As has been widely docu-
mented in the literature, home ownership generally increases with age and is higher for

13
State, market, and family: housing inequality among the young… 97

Table 1  Variable definitions
Variables Definitions

Age Age of the household head

Married A dummy variable for whether the household head is
married
Have children A dummy variable for whether the household head has
children
Local hukou A dummy variable that equals one if at least one young
adult in the household has a local hukou: hukou belongs
to the current residing district
Urban hukou A dummy variable that equals one if at least one young
adult in the household has an urban hukou
Cadre A dummy variable that equals one if at least one young
adult in the household is a cadre
CPC member A dummy variable that equals one if at least one young
adult in the household is a CPC member
Government A dummy variable that equals one if at least one young
adult in the household works in the government or
public institutions
SOE A dummy variable that equals one if at least one young
adult in the household works in state-owned-enterprises
Schooling years The highest level of education (in terms of years of
schooling) between husband and wife
Household income Household annual income in current Chinese yuan
Managerial position A dummy variable that equals one if at least one young
adult in the household holds a managerial position in
the workplace
Schooling years (parents of the household head) The highest level of education (in terms of years of
schooling) between father and mother
Urban hukou (parents of the household head) A dummy variable that equals one if at least one of the
parents has an urban hukou
Cadre (parents of the household head) A dummy variable that equals one if at least one of the
parents is a cadre
Downtown A dummy variable that equals one if the household lives
in the downtown area
City housing price 2015 city-level average sale price for commodity building
(yuan/m2)

married people and people having children (Li and Li 2006; Wang and Otsuki 2015). For
example, the home-ownership rate of married households is 74%, while that of the single
households is only 44%. However, due to the increase in family size, married people and
people having children also have a smaller living space per person: the per capital living
space of households with children is 10 m2 lower than that of households without children.
A similar gap in living space is observed between the married and the single.
Table  2 also shows that, after decades of market-oriented reforms, institutional factors
such as hukou status, CPC membership, cadre status, and types of affiliations still have a great
effect on housing consumption. In particular, it seems that nonlocal hukou households and
rural-hukou households suffer great disadvantages in the urban housing market. For instance,
households with local hukou have a home-ownership rate of 85%, enjoy a living space of
26 m2 per capita, and live in dwellings worth one million on average (in Chinese yuan), while

13
 98 G. Niu, G. Zhao

Table 2  Housing consumption across different groups

Ownership Liv. space (­ m2/ Overcrowding Housing wealth
person) (10,000 yuan)

Age category
 18–29 0.6 26.69 0.09 92.04
 30–40 0.77 24.61 0.07 101.8
Married
 No 0.44 35.95 0.09 106.07
 Yes 0.74 24.92 0.07 99.29
Have children
 No 0.64 33.28 0.06 104.24
 Yes 0.76 23.06 0.08 98.26
Hukou location
 Non-local 0.38 20.44 0.19 67.94
 Local 0.85 26.71 0.04 109.57
Hukou type
 Rural 0.5 22.6 0.17 45.5
 Urban 0.84 26.27 0.03 123.48
CCP member
 No 0.69 24.19 0.09 84.34
 Yes 0.83 27.44 0.03 135.84
Cadre status
 No cadre status 0.72 24.93 0.08 96.47
 Has cadre status 0.95 29.92 0.01 170.31
Types of affiliation
 Government 0.86 27.64 0.02 121.61
 SOE 0.84 26.45 0.04 133.43
 Private 0.66 23.96 0.1 81.74
Schooling years
 ≤ 9 0.55 22.29 0.17 37.38
 > 9 0.78 25.88 0.05 116.29
Household annual income (Yuan)
  ≤ 100,000 0.7 24.41 0.1 56.13
  > 100,000 0.78 26.14 0.04 160.72
Managerial position
 No 0.71 24.96 0.08 88.95
 Yes 0.8 25.74 0.04 136.36
Schooling years of parents
  ≤ 9 0.69 24.43 0.1 81.87
  > 9 0.81 26.38 0.04 131.04
Hukou type of parents
 Rural 0.63 23.99 0.11 70.8
 Urban 0.87 26.68 0.03 137.81
Cadre status of parents
 No cadre status 0.73 24.89 0.08 93.52
 Has cadre status 0.82 29.42 0.01 209.52

13
State, market, and family: housing inequality among the young… 99

Table 2  (continued)
Ownership Liv. space (­ m2/ Overcrowding Housing wealth
person) (10,000 yuan)

Area type
 Suburb and town 0.74 26.95 0.08 68.83
 Downtown 0.73 24.25 0.07 114.38
­ 2)
City hosue price (per m
  < 7000 Yuan 0.8 26.82 0.04 53.84
  ≥ 7000 Yuan 0.67 23.53 0.11 144.24
Total 0.73 25.13 0.07 99.42

the corresponding figures for households with non-local hukou are only 38%, 20 m2, and 0.6
million, respectively. At the same time, market abilities, such as education and income, are
closely related to housing consumption in contemporary China. Highly educated and high-
income households are much more likely to own houses, enjoy larger living spaces and have
more housing wealth. For example, the home-ownership of those having at least 9 years of
schooling is close to 80%, more than 30 percentage points higher than that of the low-educated
people. The gap in housing wealth between the high educated and the low educated is even
more striking (1.16 million versus 0.37 million). In addition, people with managerial positions
also have access to better housing. Consistent with our hypothesis, parental characteristics are
related to housing consumption in addition to intragenerational factors. For example, in terms
of home-ownership rate, households with low-educated parents, with rural-hukou parents,
and with non-cadre parents lag behind by 12 percentage points, 24 percentage points, and 9
percentage points, respectively. Finally, households in downtown areas and cities with high
housing prices have lower home-ownership rates and smaller living spaces, but they simulta-
neously obtain more housing wealth. For example, the average housing wealth of household
in downtown areas is 1.14 million Chinese yuan, which is 0.46 million more than the average
housing wealth of other households.
As reported in the previous literature, Table  2 suggests that the majority (over 70%) of
households in urban China have become homeowners. In addition, living space has also
improved substantially and the problem of residential overcrowding has been greatly allevi-
ated. In particular, less than 10% of households in our sample suffer from overcrowding. In
parallel with soaring housing prices, the value of households’ housing wealth has also reached
an impressive level (around one million Chinese yuan). Compared with inequality in home-
ownership or living space, the inequality in housing wealth seems to be more severe. For
example, while around half of the rural hukou households are home-owners, their average
housing wealth is only about one-third of the average housing wealth of urban hukou house-
holds. Housing wealth is one of the most important components of household wealth (Tan
et al. 2015). Therefore, apart from studying inequality in home-ownership, the examination
of inequality in housing wealth is important for a comprehensive understanding of housing
inequality.

13
 100 G. Niu, G. Zhao

5 Determinants of housing consumption of the young generation:

regression analysis

To further explore the determinants of housing consumption, we use multivariable regres-

sions in the form:
Hi = 𝛼 + 𝛽Xi + 𝜖i

where Hi is the level of housing consumption for household i, Xi is a vector of explanatory

variables, and 𝜖i is the error term.
As mentioned in the data section, we select four measures for housing consumption:
home ownership, living space per person, overcrowding, and housing wealth. We use OLS
regressions when the explained variable is living space per person or housing wealth. We
use Logit regressions when the explained variable is home ownership or overcrowding, as
the two variables are binary. Table 3 reports the regression results. For Logit regressions,
we report the average marginal effects instead of the raw coefficients to aid interpretation.
In addition, standard errors are clustered at the city level to adjust for correlations of obser-
vations within the city.
As can be expected, housing consumption varies by life cycle. Older people are more
likely to be home-owners, enjoy larger living spaces and have more housing wealth. In
addition, transitions into marriage and parenthood increase the likelihood of home-owner-
ship, which is consistent with findings in the literature (Huang et al. 2013; Li and Li 2006;
Wang and Otsuki 2015). In particular, married people are approximately 10% more likely
to be home-owners. However, having children in the house also reduces living space per
person and intensifies the problem of overcrowding.
Institutional factors, especially hukou status, seem to still play a dominant role in hous-
ing consumption. Compared with nonlocal hukou households, and accounting for other
explanatory variables, on average, local hukou households are approximately 20% more
likely to own their dwellings and consume 4.7 more square meters of living space; further,
they are 6.1% less likely to face the problem of overcrowding and have 0.33 million (in
Chinese yuan) more housing wealth. The effect of local hukou on housing consumption is
also economically substantial; the effect of local hukou is roughly equivalent to the effect
of an extra 16  years of schooling on home ownership, an extra 7  years of schooling on
residential overcrowding, and an extra 6 years of schooling on housing wealth. Compared
with local hukou, the additional effect of urban hukou on housing consumption is relatively
smaller. This phenomenon echoes a growing body of studies finding that the segmentation
between locals and nonlocals has become more salient than the traditional segmentation
between urban residents and rural residents in urban China (Huang et al. 2013; Wang et al.
2014). An important underlying reason is that decentralization policies in contemporary
China have undermined the incentives for local governments to cover the welfare costs
for non-local workers (Wu 2013). Nevertheless, after controlling for local hukou and other
characteristics, urban-hukou households still enjoy a substantially higher level of hous-
ing consumption than rural-hukou households. Therefore, despite years of hukou reform,
the hukou system remains one of the most important institutions of social stratification in
urban China.
Apart from hukou status, other institutional factors also have an effect on the young
generation’s housing consumption. For example, Table 3 shows that cadre households are
13% more likely to be homeowners than noncadre households and have 0.3 million (in Chi-
nese yuan) more in housing wealth, controlling for other factors. The variable cadre status

13
State, market, and family: housing inequality among the young… 101

Table 3  Determinants of housing consumption: multivariate regressions

Ownership Living space Overcrowding Housing wealth
Logit OLS Logit OLS

Demographic variables
 Age 0.008*** 0.103  − 0.001 1.445**
(0.001) (0.070) (0.001) (0.586)
 Married 0.095**  − 5.560  − 0.027  − 0.149
(0.043) (5.453) (0.032) (35.214)
 Have children 0.046**  − 11.375*** 0.037** 15.644*
(0.022) (1.069) (0.018) (8.623)
Institutional variables
 Local hukou 0.209*** 4.692***  − 0.061*** 32.617***
(0.014) (1.104) (0.017) (9.017)
 Urban hukou 0.085*** 1.132  − 0.040*** 13.814**
(0.019) (1.231) (0.010) (5.852)
 CCP member  − 0.007 0.831  − 0.005 11.697
(0.014) (0.870) (0.013) (8.956)
 Cadre 0.126** 2.088  − 0.033 29.628**
(0.053) (1.334) (0.063) (14.322)
 Government  − 0.015 1.882*  − 0.004  − 14.830**
(0.022) (1.036) (0.015) (6.112)
 SOE 0.041*** 0.595  − 0.005 8.394
(0.015) (0.769) (0.014) (7.023)
Market variables
  Schooling years 0.013***  − 0.032  − 0.009*** 5.842***
(0.004) (0.135) (0.002) (1.203)
Ln household income 0.010*** 0.151  − 0.002 9.458***
(0.003) (0.150) (0.002) (1.384)
 Managerial position 0.010  − 0.022  − 0.008 3.469
(0.020) (0.741) (0.016) (7.334)
Intergenerational variables
 Schooling years (parents) 0.004* 0.156*  − 0.002** 1.372**
(0.002) (0.094) (0.001) (0.563)
 Urban hukou (parents) 0.073***  − 0.400  − 0.008 28.199***
(0.019) (0.787) (0.014) (6.774)
 Cadre (parents)  − 0.020 2.595  − 0.095* 61.647***
(0.037) (2.216) (0.057) (17.822)
Location-related variables
 Downtown  − 0.041**  − 3.816*** 0.007 14.098**
(0.020) (0.948) (0.011) (5.580)
 City house price  − 0.090***  − 2.584*** 0.036*** 59.816***
(0.015) (0.577) (0.012) (13.270)
N 3375 2993 2993 3322
(pseudo) R-square 0.278 0.097 0.221 0.253

Standard errors, clustered at the city level, are in parentheses. ***, **, * indicate 1%, 5%, and 10% signifi-
cance levels, respectively. Average marginal effects and pseudo R-squares are presented for Logit models.
Living space is measured in m ­ 2 per person. Housing wealth is measured in 10,000 yuan units. Compared
with Column 1, numbers of observations in Columns 2–4 are reduced due to missing values in living space
and housing wealth

13
 102 G. Niu, G. Zhao

is likely to capture the impact of redistributive power, as we have already controlled for
managerial functions. Consistent to our finding, the literature has documented that cadre
status could still increase household earnings in the late 2000s, indicating a persistence of
political power (Jin et al. 2014). In addition, working in the public sector is associated with
higher home-ownership and larger living space, which is consistent with the findings from
previous studies (Fu 2016; Huang and Clark 2002). However, the effect of party mem-
bership is not significant in our model, although party membership was found to strongly
affect housing consumption in some studies that focused on the early transition period
(Logan et al. 1999). This phenomenon has also been documented in studies that examined
more recent data (Huang and Yi 2010). One explanation is that after decades of market-
oriented reform, there is less of a stress on ideology, and party membership does not neces-
sarily translate into higher social status. It is also possible that the impact of party member-
ship has already been captured by status variables, such as income and cadre identity, as it
has been found that party members are more likely to obtain better-compensated positions
(Li and Walder 2001).
At the same time, market abilities in general also have an impact on housing consump-
tion. Higher income and more educated households are more likely to own their dwell-
ings, are less likely to suffer from residential overcrowding and have more housing wealth.
Previous studies that focused on the early period of housing marketization often failed to
find a significant relationship between income and housing consumption (Huang 2008).
Therefore, our results provide suggestive evidence that the influence of market power is
increasing as reform deepens in China.
In addition to intragenerational factors, Table  3 suggests that parents’ backgrounds in
terms of education levels, hukou status, and cadre status are also closely related to the
young generation’s housing consumption. For example, conditional on other factors, house-
holds with an urban hukou parent are approximately 7% more likely to own houses. It can
be found that the impact of having an urban hukou parent on home ownership is equivalent
to a young adult himself/herself receiving an extra 5.6 years of schooling. The impact of
parental background on housing wealth is also impressive. Holding everything else con-
stant, having an urban hukou parent increases the housing wealth of a young household
by 0.26 million (in Chinese yuan). More strikingly, having a cadre parent will increase
the housing wealth of a young household by 0.62 million (in Chinese yuan), an impact
that more than doubles that of an individuals’ own cadre status. Similarly, using a survey
of college graduates in 2010, Li et al. (2012) found that the having a cadre parent leads to
a wage premium of 15%. Therefore, in contemporary China there exists a strong correla-
tion between parents’ political position and children’s socio-economic outcomes. Housing
constitutes the main component of household wealth and many studies have suggested that
young people’s housing trajectories significantly affect their long-term well-being (Ham-
nett 1999; Mckee 2012). The nontrivial impact of parental background on young people’s
housing outcomes indicates that we should pay close attention to intergenerational trans-
mission of advantages when studying social stratification in the long-run. In the context of
a transitioning China, the parents that could provide strong housing support to their chil-
dren today are mostly those who were favored in the socialist era. During China’s hous-
ing privatization process, those parents accumulated considerable housing wealth based on
their bureaucratic privileges (Logan et al. 2010). Several decades after the housing reform,
those parents have greater capacities to help their children in the housing market. Recently
there are growing concerns among researchers, policymakers, and the public about the
declining intergenerational mobility (in particular income mobility) in China (Deng et al.
2013; Fan 2016). As housing wealth is the largest source of wealth for most Chinese

13
State, market, and family: housing inequality among the young… 103

Table 4  Shapley-Owen decomposition results: relative contribution to the explained variance in the out-
come variable (in %)
Ownership Living space Overcrowding Housing wealth

Demographic variables 8.17 53.03 2.68 1.31

Institutional variables 54.39 20.93 44.39 14.37
Market variables 9.45 2.47 19.53 28.18
Intergenerational variables 10.91 4.22 9.43 15.16
Location-related variables 16.96 19.34 23.98 40.98

The table shows the relative contributions (in %) of different groups of explanatory variables to the
explained variance (measured by R-squared) in the outcome variable based on Shapley-Owen decomposi-
tion method. To obtain the results, we in general use the regression models in Table 3. However, as it is not
straightforward to interpret the pseudo R-squared from a Logit model, we use linear probability models and
decompose R-squared even when outcome variables are binary

households, our findings suggest that the intergenerational correlation of wealth can be an
important source of inequality and stratification in China. Moreover, our results indicate
that through intergenerational transmission of advantages, the influence of socialist institu-
tions could persist across generations, therefore enriching the power persistence argument
(Bian and Logan 1996) from an intergenerational perspective.
Finally, location matters. Conditional on other factors, households in downtown areas
and in high house-price cities are significantly less likely to own houses, and enjoy smaller
living spaces, and they are more likely to suffer from overcrowding; however, at the same
time have more housing wealth. The large and significant impact of city housing prices
reflects the uneven regional development in China.
Regression coefficients reveal how changes in explanatory variables will affect the
mean level of the outcome variable. As a complementary analysis, we employ a Shapley-
Owen decomposition, a now widely recognized regression-based inequality decomposition
method, to quantify the contributions of different categories of explanatory variables to
housing inequality (Chantreuil and Trannoy 2013; Charpentier and Mussard 2011; Deutsch
et al. 2018; Israeli 2007; Shorrocks 2013). This decomposition procedure determines the
relative contributions of different variables to the explained variance in the outcome vari-
able (measured by R-squared) by eliminating them one at a time and averaging the mar-
ginal effects from each exclusion across all possible combinations of regressors. As the
method is quite computationally intensive when a large number of regressors are included,
we combine explanatory variables into five groups to reduce computational burden and aid
interpretation. Table 4 presents the Shapley-Owen decomposition results for our four meas-
ures of housing consumption. The results reveal the importance of institutional variables
in explaining China’s housing stratification. For example, Column 1 suggests that institu-
tional variables, which contribute 54%, are the most important determinants of inequality
in home-ownership. Institutional variables also contribute the most to the variation in over-
crowding. Market variables seem to be more relevant to the inequality in housing wealth. It
might be the case that institutional privileges, such as having local urban hukou and being
in the public sector, can help bypass housing purchase restrictions and provide access to
subsidized housing, which is especially relevant for tenure choice, while market factors,
such as income, are important for people to afford high-value housing. The contributions of
intergenerational factors are also nontrivial, especially to inequality in home-ownership and
housing wealth. Given that parental background could have indirect impacts on housing

13
 104 G. Niu, G. Zhao

consumption through its influence on children’s own socioeconomic status, such as educa-
tion and income, the overall contribution of intergenerational factors to housing inequality
is probably larger than the figure shown in Table 4. Interestingly, location-related variables
make the largest contribution to variations in housing wealth, indicating the huge regional
inequality in contemporary China. Finally, demographic variables in general make the low-
est contribution, except for the case of living space, which probably corresponds to the fact
that more people need more housing space.
To explore the possibility that the determinants of housing consumption differ between
cities, we split our sample into two subgroups based on city-level housing prices. One sub-
group consists of households living in high house-price cities (the 2015 city-level housing
price is at least 7000 yuan); another subgroup consists of households living in low house-
price cities (the 2015 city-level housing price is below 7000  yuan). With the 7000  yuan
cutoff, each subgroup roughly includes half of the sample households. We estimate multi-
variable regressions for our four explained variables (housing ownership, living space per
person, overcrowding, and housing wealth) in these subgroups. The corresponding results
are listed in Table  5. Hukou status is still an important factor that affects housing con-
sumption in both types of cities. In addition, the impact of hukou status is in general larger
in high house-price cities. High house-price cities are mostly large cities that put stricter
restrictions on housing choice for people without local-urban hukou, while low house-price
cities are mainly small cities where access to civil amenities is more readily and equally
granted (Huang et  al. 2013). Furthermore, parents’ hukou status is also more important
in high-price cities. Finally, although households in high-price cities on average obtain
higher housing wealth, as suggested in Table  2, inequality in housing wealth across dif-
ferent social groups is also substantially higher in high-price cities according to the results
in Table 5. We also attempted to split cities in our sample based on other criteria, such as
administrative rank and economic developments. The results generally suggest that hous-
ing inequality and housing difficulty are more severe in large cities.

6 Conclusions

Along with the progress of economic development and market reforms, the housing
consumption of Chinese urban households has significantly improved over the past sev-
eral decades. Simultaneously, however, housing inequality is growing rapidly and hous-
ing prices are skyrocketing in many Chinese cities. Given this context, the availability of
decent housing is becoming a crucial concern for the young generation in urban China,
who no longer enjoy the many housing benefits that had been provided by the state in the
socialist era.
Drawing on data from the China Household Finance Survey, in this paper we investigate
inequality and the determinants of housing consumption among the young generation in
urban China in 2015, which is almost three decades after China’s housing privatization. We
focus on four measures of housing consumption; namely, home ownership, living space per
person, overcrowding, and housing wealth. To shed light on the debate over market transi-
tion, we examine the impacts of a variety of institutional and market factors. The results
suggest that institutional forces have a long-lasting effect on social stratification in China.
In particular, despite the Chinese government having issued many documents and deci-
sions on hukou reform in recent years, hukou status is still the dominant factor that affects
housing consumption for the young generation. At the same time, market factors, such as

13
 Table 5  Determinants of housing consumption in two types of cities
Ownership Living space Overcrowding Housing wealth
High Low High Low High Low High Low

Demographic variables
 Age 0.008*** 0.008*** 0.138 0.091  − 0.003*  − 0.000 1.316 0.839***
(0.002) (0.002) (0.088) (0.110) (0.002) (0.001) (1.018) (0.262)
 Married 0.172***  − 0.003 1.705  − 15.557  − 0.019  − 0.055 41.701  − 55.951
(0.053) (0.059) (4.371) (10.979) (0.048) (0.050) (34.029) (60.579)
 Have children 0.061*** 0.027  − 10.913***  − 12.351*** 0.037 0.063* 24.472*  − 0.249
(0.023) (0.037) (1.384) (1.483) (0.026) (0.036) (12.756) (4.645)
Institutional variables
 Local hukou 0.249*** 0.159*** 4.950*** 3.874***  − 0.079***  − 0.033*** 40.056*** 7.463
(0.018) (0.026) (1.623) (1.253) (0.027) (0.012) (12.728) (7.095)
 Urban hukou 0.074** 0.101*** 0.697 1.410  − 0.041***  − 0.034*** 21.249* 12.729***
(0.029) (0.027) (1.869) (1.622) (0.015) (0.010) (11.010) (4.448)
 CCP member  − 0.004  − 0.010 1.523 0.154 0.001  − 0.008 6.642 11.619
(0.017) (0.022) (1.421) (1.054) (0.019) (0.018) (14.917) (8.017)
State, market, and family: housing inequality among the young…

 Cadre 0.188*** 0.058 0.223 3.656**  − 1.043*** 0.012 51.895* 17.307*

(0.070) (0.068) (1.973) (1.841) (0.124) (0.043) (25.546) (9.895)
 Government  − 0.017  − 0.025 3.113 0.337  − 0.012 0.007  − 0.335  − 14.675***
(0.031) (0.033) (1.886) (0.987) (0.018) (0.022) (7.871) (5.062)
 SOE 0.042** 0.029  − 0.297 1.125 0.010  − 0.038 18.733 1.385
(0.017) (0.026) (1.000) (1.067) (0.020) (0.026) (11.483) (5.515)
Market variables
 Schooling years 0.012* 0.012*** 0.046  − 0.052  − 0.012***  − 0.005*** 7.905*** 1.645**
(0.006) (0.004) (0.212) (0.211) (0.003) (0.002) (1.691) (0.823)
 Ln household income 0.007** 0.012*** 0.292* 0.035  − 0.003  − 0.001 12.293*** 5.440***
(0.004) (0.004) (0.155) (0.248) (0.003) (0.002) (1.646) (1.263)
105

13
 Table 5  (continued)
106

Ownership Living space Overcrowding Housing wealth

High Low High Low High Low High Low

13
 Managerial position  − 0.008 0.033  − 1.360 2.043*  − 0.007  − 0.016 1.755 3.973
(0.030) (0.022) (0.951) (1.106) (0.025) (0.021) (12.071) (4.198)
Intergenerational variables
 Schooling years (parents) 0.003 0.004 0.046 0.300**  − 0.002  − 0.003** 1.574 1.068***
(0.003) (0.003) (0.121) (0.134) (0.002) (0.001) (0.927) (0.380)
 Urban hukou (parents) 0.088*** 0.053** 0.766  − 1.693  − 0.047** 0.024** 50.658*** 6.289
(0.027) (0.026) (0.879) (1.310) (0.022) (0.010) (9.510) (4.557)
 Cadre (parents) 0.038  − 0.108** 0.738 5.282  − 0.111  − 0.437*** 73.893*** 7.488
(0.040) (0.050) (1.401) (4.915) (0.081) (0.066) (24.936) (13.455)
Location-related variables
 Downtown  − 0.050  − 0.035  − 3.565**  − 3.945*** 0.010 0.003 23.617*** 2.868
(0.032) (0.023) (1.348) (1.222) (0.018) (0.011) (8.427) (3.913)
 City house price  − 0.099***  − 0.227*  − 2.183***  − 12.974** 0.034*** 0.060 50.049*** 78.751***
(0.014) (0.135) (0.534) (6.012) (0.011) (0.050) (11.569) (20.376)
N 1703 1672 1539 1454 1539 1454 1675 1647
(pseudo) R-square 0.349 0.198 0.094 0.097 0.236 0.175 0.259 0.097

Standard errors, clustered at the city level, are in parentheses. ***, **, and * indicate 1%, 5%, and 10% significance levels, respectively. OLS models are estimated for living
space per person and housing wealth. Logit models are estimated for ownership and overcrowding. Average marginal effects and pseudo R-squares are presented for Logit
models. Living space is measured in ­m2 per person. Housing wealth is measured in 10,000 yuan units. “High” stands for high house-price cities (city-level average housing
price is at least 7000 yuan per ­m2) and “Low” stands for low house-price cities (city-level average housing price is below 7000 yuan per ­m2)
G. Niu, G. Zhao
State, market, and family: housing inequality among the young… 107

education and income, also play an important role in housing differentiation. Therefore,
China’s transition to a market economy is still partial. In addition, we take into account the
intergenerational influence of family background and find that parental background has a
nonnegligible impact on young people’s housing situations.
Our analysis contributes to the understanding of housing stratification in transitional
societies characterized by a blend of socialist legacies and market forces. Housing strati-
fication is an important aspect of social stratification. In contemporary China, it is more
difficult to reduce the inequality in housing, especially in the dimension of housing wealth,
than to reduce inequality in other dimensions, such as income and education, because aver-
age housing prices are already many times greater than average incomes in many cities. In
recent years, a growing body of research has found a strong link between incomes across
generations in China’s market reform period, resulting in an upsurge of scholarly and pol-
icy concerns on the equality of opportunities among young people in China (Deng et al.
2013; Fan 2016; Gong et al. 2012). Compared to income, wealth is much more unequally
distributed in contemporary China, and wealth tends to generate high returns (Piketty
2014; Xie and Jin 2015). As housing constitutes the major part of household wealth, the
finding that parental background has a large impact on young people’s housing outcomes
has important implications for intergenerational wealth mobility and long-run stratification
patterns in China. Due to data availability, we could not directly observe wealth data over
different generations in a household. Future research could investigate in more detail the
intergenerational linkage of housing wealth, or wealth in general, in China and its trend
over time.

Acknowledgements  This work was supported by the 111 Project of China (No. B16040) and the National
Natural Science Foundation of China (No. 71904160).

References
Bian, Y., & Logan, J. R. (1994). Income inequality in urban China. Albany: State University of New York
Press.
Bian, Y., & Logan, J. R. (1996). Market transition and the persistence of power: The changing stratification
system in urban China. American Sociological Review, 61, 739–758.
Burell, M. (2006). China’s housing provident fund: Its success and limitations. Housing Finance Interna-
tional, 20, 38–49.
Buttimer, J. R., Gu, A. Y., & Yang, T. T. (2004). The Chinese housing provident fund. International Real
Estate Review, 7, 1–30.
Campos, B. C., Yiu, C. Y., Shen, J., Liao, K., & Maing, M. J. (2016). The anticipated housing pathways to
homeownership of young people in Hong Kong. European Journal of Housing Policy, 16, 223–242.
Cao, Y., & Nee, V. (2000). Comment: Controversies and evidence in the market transition debate. American
Journal of Sociology, 105, 1175–1189.
Chantreuil, F., & Trannoy, A. (2013). Inequality decomposition values: The trade-off between marginality
and efficiency. Journal of Economic Inequality, 11, 83–98.
Charles, K. K., & Hurst, E. (2003). The correlation of wealth across generations. Journal of Political Econ-
omy, 111, 1155–1182.
Charpentier, A., & Mussard, S. (2011). Income inequality games. Journal of Economic Inequality, 9,
529–554.
Chen, J., Guo, F., & Wu, Y. (2011). One decade of urban housing reform in China: Urban housing price
dynamics and the role of migration and urbanization, 1995–2005. Habitat International, 35, 1–8.
Chen, Y., Fang, W., Li, L., Morrissey, P., & Nie, C. (2016). Social attitudes in contemporary China. New
York: Routledge.
Chow, G. C., & Niu, L. (2015). Housing prices in urban China as determined by demand and supply. Pacific
Economic Review, 20(1), 1–16.

13
 108 G. Niu, G. Zhao

Conley, D. (2001). Decomposing the black-white wealth gap: The role of parental resources, inheritance,
and investment dynamics. Sociological Inquiry, 71, 39–66.
Coulter, R. (2018). Parental background and housing outcomes in young adulthood. Housing Studies, 33,
1–23.
Deng, Q., Gustafsson, B., & Li, S. (2013). Intergenerational income persistence in urban China. Review of
Income and Wealth, 59, 416–436.
Deng, W., Hoekstra, J., & Elsinga, M. (2016). The changing determinants of homeownership amongst
young people in urban China. European Journal of Housing Policy, 16, 201–222.
Deutsch, J., Alperin, M. N. P., & Silber, J. (2018). Using the Shapley decomposition to disentangle the
impact of circumstances and efforts on health inequality. Social Indicators Research, 138, 1–21.
Fan, Y. (2016). Intergenerational income persistence and transmission mechanism: Evidence from urban
China. China Economic Review, 41, 299–314.
Forrest, R., & Hirayama, Y. (2009). The uneven impact of neoliberalism on housing opportunities. Interna-
tional Journal of Urban and Regional Research, 33, 998–1013.
Fu, Q. (2015). When fiscal recentralisation meets urban reforms: Prefectural land finance and its association
with access to housing in urban China. Urban Studies, 52, 1791–1809.
Fu, Q. (2016). The persistence of power despite the changing meaning of homeownership: An age-period-
cohort analysis of urban housing tenure in China, 1989–2011. Urban Studies, 53, 1225–1243.
Gerber, T. P. (2000). Educational stratification in contemporary Russia: Stability and change in the face of
economic and institutional crisis. Sociology Of Education, 73, 219–246.
Gerber, T. P., & Hout, M. (1998). More than shock therapy: Market transition, employment, and income in
Russia, 1991–1995. American Journal of Sociology, 104, 1–50.
Gong, H. C., Leigh, A., & Meng, X. (2012). Intergenerational income mobility in urban China. Review of
Income and Wealth, 58, 481–503.
Hamnett, C. (1999). Winners and losers: Home ownership in modern Britain. London: UCL Press.
He, S., Liu, L., Yang, G., & Wang, F. (2017). Housing differentiation and housing poverty in Chinese low-
income urban neighborhoods under the confluence of state-market forces. Urban Geography, 38,
729–751.
Helderman, A. C., & Mulder, C. H. (2007). Intergenerational transmission of homeownership: The roles of
gifts and continuities in housing market characteristics. Urban Studies, 44, 231–247.
Hochstenbach, C. (2018). Spatializing the intergenerational transmission of inequalities: Parental wealth,
residential segregation, and urban inequality. Environment and Planning A, 50, 689–708.
Hoolachan, J. E., Mckee, K., Moore, T., & Soaita, A. M. (2017). ‘Generation rent’ and the ability to ‘settle
down’: Economic and geographical variation in young people’s housing transitions. Journal of Youth
Studies, 20, 63–78.
Huang, X., Dijst, M., van Weesep, J., & Zou, N. (2013). Residential mobility in China: Home ownership
among rural–urban migrants after reform of the hukou registration system. Journal of Housing and
the Built Environment, 29, 615–636.
Huang, Y. (2008). A room of one’s own: housing consumption and residential crowding in transitional
urban China. Environment & Planning A, 35, 591–614.
Huang, Y. (2010). The road to homeownership: A longitudinal analysis of tenure transition in urban China
(1949–94). International Journal of Urban & Regional Research, 28, 774–795.
Huang, Y. (2013). Low-income housing in Chinese cities: Policies and practices. The China Quarterly, 212,
941–964.
Huang, Y., & Clark, W. A. V. (2002). Housing tenure choice in transitional urban China: A multilevel analy-
sis. Urban Studies, 39, 7–32.
Huang, Y., & Jiang, L. (2009). Housing inequality in transitional Beijing. International Journal of Urban
and Regional Research, 33, 936–956.
Huang, Y., & Tao, R. (2015). Housing migrants in Chinese cities: Current status and policy design. Environ-
ment and Planning C: Government and Policy, 33, 640–660.
Huang, Y., & Yi, C. (2010). Consumption and tenure choice of multiple homes in transitional urban China.
International Journal of Housing Policy, 10, 105–131.
Huang, Y., & Yi, C. (2011). Second home ownership in transitional urban China. Housing Studies, 26,
423–447.
Huang, Z., Du, X., & Yu, X. (2015). Home ownership and residential Satisfaction: evidence from Hang-
zhou, China. Habitat International, 49, 74–83.
Isengard, B., Konig, R., & Szydlik, M. (2018). Money or space? Intergenerational transfers in a comparative
perspective. Housing Studies, 33, 178–200.
Israeli, O. (2007). A Shapley-based decomposition of the r-square of a linear regression. Journal of Eco-
nomic Inequality, 5, 199–212.

13
State, market, and family: housing inequality among the young… 109

Jin, Y., Fan, M., Cheng, M., & Shi, Q. (2014). The economic gains of cadre status in rural China: inves-
tigating effects and mechanisms. China Economic Review, 31, 185–200.
Keister, L. A. (2004). Race, family structure, and wealth: The effect of childhood family on adult asset
ownership. Sociological Perspectives, 47, 161–187.
Lee, H., Myers, D., Painter, G., Thunell, J., & Zissimopoulos, J. (2018). The role of parental financial
assistance in the transition to homeownership by young adults. Journal of Housing Economics.
Forthcoming
Lennartz, C., Arundel, R., & Ronald, R. (2016). Younger adults and homeownership in Europe through
the global financial crisis. Population Space and Place, 22, 823–835.
Li, B., & Shin, H. B. (2013). Intergenerational housing support between retired old parents and their
children in urban China. Urban Studies, 50, 3225–3242.
Li, B., & Walder, A. G. (2001). Career advancement as party patronage: sponsored mobility into the
Chinese administrative elite, 1949–1996. American Journal of Sociology, 106, 1371–1408.
Li, B., & Zhang, Y. (2011). Housing provision for rural-urban migrant workers in Chinese cities: The
roles of the state, employers and the market. Social Policy & Administration, 45, 694–713.
Li, H., Meng, L., Shi, X., & Wu, B. (2012). Does having a cadre parent pay? Evidence from the first job
offers of Chinese college graduates. Journal of Development Economics, 99, 513–520.
Li, J., Gu, Y., & Zhang, C. (2015). Hukou-based stratification in urban China’s segmented economy.
Chinese Sociological Review, 47, 154–176.
Li, L., Li, S.-M., & Chen, Y. (2010). Better city, better life, but for whom? The Hukou and resident card
system and the consequential citizenship stratification in Shanghai. City, Culture and Society, 1,
145–154.
Li, S., & Li, L. (2006). Life course and housing tenure change in urban China: A study of Guangzhou.
Housing Studies, 21, 653–670.
Li, S. M., & Yi, Z. (2007). The road to homeownership under market transition Beijing, 1980–2001.
Urban Affairs Review, 42, 342–368.
Liu, Y., He, S., & Wu, F. (2012). Housing differentiation under market transition in Nanjing, China. The
Professional Geographer, 64, 554–571.
Logan, J. R., Bian, Y., & Bian, F. (1990s). Housing inequality in urban China in the 1990s. International
Journal of Urban and Regional Research, 23, 7–25.
Logan, J. R., Fang, Y., & Zhang, Z. (2010). The winners in China’s urban housing reform. Housing Stud-
ies, 25, 101–117.
Mckee, K. (2012). Young People, Homeownership and future welfare. Housing Studies, 27, 853–862.
Mckee, K., Moore, T., Soaita, A. M., & Crawford, J. (2017). ‘Generation rent’ and the fallacy of choice.
International Journal of Urban and Regional Research, 41, 318–333.
Meng, X., & Zhang, J. (2001). The two-tier labor market in urban China: Occupational segregation and
wage differentials between urban residents and rural migrants in Shanghai. Journal of Compara-
tive Economics, 29, 485–504.
Myers, D., Painter, G., Zissimopoulos, J., Lee, H., & Thunell, J. (2019). Simulating the change in young
adult homeownership through 2035: Effects of growing diversity and rising educational attain-
ment. Housing Policy Debate, 29, 126–142.
National Bureau of Statistics (NBS). (2016). China city statistical yearook 2016. Beijing: China Statisti-
cal Press.
Nee, V. (1989). A theory of market transition: From redistribution to markets in state socialism. Ameri-
can Sociological Review, 54, 663.
Nee, V. (1996). The emergence of a market society: Changing mechanisms of stratification in China.
American Journal of Sociology, 101, 908–949.
Niu, G., & Zhao, G. (2018a). Identity and trust in government: A comparison of locals and migrants in
urban China. Cities, 83, 54–60.
Niu, G., & Zhao, G. (2018b). Living condition among China’s rural–urban migrants: Recent dynamics
and the inland–coastal differential. Housing Studies, 33, 476–493.
Or, T.-M. (2018). Pathways to homeownership among young professionals in urban China: The role of
family resources. Urban Studies, 55, 2391–2407.
Piketty, T. (2014). Capital in the twenty-first century. Cambridge: Belknap Press.
Prix, I., & Pfeffer, F. T. (2017). Does Donald need uncle scroog? Extended Family’s wealth and chil-
dren’s educational attainment in the United States. In J. Erola & E. Kilpi-Jakonen (Eds.), Social
inequality across generations: The role of compensation and multiplication in resource accumula-
tion. Cheltenham: Edward Elgar.
Ren, Q., & Hu, R. (2016). Housing inequality in urban China. Chinese Journal of Sociology, 2, 144–167.

13
 110 G. Niu, G. Zhao

Ronald, R., & Lennartz, C. (2018). Housing careers, intergenerational support and family relations.
Housing Studies, 33, 147–159.
Ronatas, A. (1994). The first shall be last? Entrepreneurship and communist cadres in the transition from
socialism. American Journal of Sociology, 100, 40–69.
Sato, H. (1990s). Housing inequality and housing poverty in urban China in the late 1990s. China Eco-
nomic Review, 17, 37–50.
Shorrocks, A. F. (2013). Decomposition procedures for distributional analysis: A unified framework
based on the Shapley value. Journal of Economic Inequality, 11, 99–126.
Sissons, P., & Houston, D. (2019). Changes in transitions from private renting to homeownership in the
context of rapidly rising house prices. Housing Studies, 34, 49–65.
Song, X., & Xie, Y. (2014). Market transition theory revisited: Changing regimes of housing inequality
in China, 1988–2002. Sociological Science, 1, 277–291.
Spilerman, S., & Wolff, F. (2012). Parental wealth and resource transfers: How they matter in france for
home ownership and living standards. Social Science Research, 41, 207–223.
Staniszkis, J. (1991). The dynamics of the breakthrough in eastern Europe: The polish experience.
Berkeley: University of California Press.
Szelenyi, I. (1987). Housing inequalities and occupational segregation in state socialist cities. Interna-
tional Journal of Urban & Regional Research, 11, 1–8.
Szelenyi, I., & Kostello, E. (1996). The market transition debate: Toward a synthesis? American Journal
of Sociology, 101, 1082–1096.
Tan, S., Wang, S., & Cheng, C. (2015). Change of housing inequality in urban China and its decomposi-
tion: 1989–2011. Social Indicators Research, 129, 29–45.
Tao, L., Hui, E. C. M., Wong, F. K. W., & Chen, T. (2015). Housing choices of migrant workers in
China: Beyond the Hukou perspective. Habitat International, 49, 474–483.
Tomaszewski, W., Smith, J. F., Parsell, C., Tranter, B., Laughlandbooy, J., & Skrbis, Z. (2017). Young,
anchored and free? Examining the dynamics of early housing pathways in Australia. Journal of
Youth Studies, 20, 904–926.
Torche, F. (2015). Analyses of intergenerational mobility: An interdisciplinary review. Annals of the
American Academy of Political & Social Science, 657, 37–62.
Walder, A. G., & He, X. (2014). Public housing into private assets: Wealth creation in urban China.
Social Science Research, 46, 85–99.
Wang, H., Guo, F., & Cheng, Z. (2014). A distributional analysis of wage discrimination against migrant
workers in China’s urban labour market. Urban Studies, 52, 2383–2403.
Wang, Y., & Otsuki, T. (2015). Do institutional factors influence housing decision of young generation
in urban China: Based on a study on determinants of residential choice in Beijing. Habitat Inter-
national, 49, 508–515.
Wang, Y. P. (2001). Urban housing reform and finance in China: A case study of Beijing. Urban Affairs
Review, 36, 620–645.
Wang, Y. P., Wang, Y., & Wu, J. (2010). Housing migrant workers in rapidly urbanizing regions: A study
of the Chinese model in Shenzhen. Housing Studies, 25, 83–100.
Wei, Z., Chen, T., Chiu, R. L. H., & Chan, E. H. W. (2017). Policy transferability on public housing at
the city level: Singapore to Guangzhou in China. Journal of Urban Planning and Development,
143, 05017010.
Wu, L. (2013). Decentralization and Hukou reforms in China. Policy and Society, 32, 33–42.
Xie, Y., & Jin, Y. (2015). Household wealth in China. Chinese Sociological Review, 47, 203–229.
Yang, Z., & Chen, J. (2014). Housing affordability and housing policy in urban China. Berlin: Springer.
Yi, C., & Huang, Y. (2014). Housing consumption and housing inequality in Chinese cities during the
first decade of the twenty-first century. Housing Studies, 29, 291–311.
Ying, Q., Luo, D., & Chen, J. (2013). The determinants of homeownership affordability among the
‘sandwich class’: Empirical findings from Guangzhou, China. Urban Studies, 50, 1870–1888.
Yuan, Z., & Chen, L. (2013). The trend and mechanism of intergenerational income mobility in China:
An analysis from the perspective of human capital, social capital and wealth. The World Economy,
36, 880–898.
Zhang, C., Shen, J., & Yang, R. (2016). Housing affordability and housing vacancy in China: The role of
income inequality. Journal of Housing Economics, 33, 4–14.
Zhang, Y., & Chen, J. (2014). The changing prevalence of housing overcrowding in post-reform China:
The case of Shanghai, 2000–2010. Habitat International, 42, 214–223.
Zhang, Y., & Eriksson, T. (2010). Inequality of opportunity and income inequality in nine Chinese prov-
inces, 1989–2006. China Economic Review, 21, 607–616.

13
State, market, and family: housing inequality among the young… 111

Zhou, X. (2000). Reply: Beyond the debate and toward substantive institutional analysis. American Journal
of Sociology, 105, 1190–1195.
Zhou, X., Tuma, N. B., & Moen, P. (1997). Institutional change and job-shift patterns in urban China, 1949
to 1994. American Sociological Review, 62, 339–365.

Publisher’s Note  Springer Nature remains neutral with regard to jurisdictional claims in published maps and
institutional affiliations.

13