Does the Spatial Mismatch Between Land Supply and Demand Intensify the Spatial Divergence of Human Capital?

Abstract

Due to greater returns to high skill and desirable amenities, high-skilled workers are increasingly agglomerating in metropolitan areas and form path dependence. This chapter explores whether the land supply policy of China constraining big cities' urban construction land quota strengthens the spatial divergence of human capital. Using city-level land supply data, population census data, and land transaction micro data, we find that the higher the degree of a city's land supply lagging behind land demand, the greater the enlargement effect of the initial share of population with college degrees on the increase in share of population with college degrees. Further research reveals that the main mechanism causing this phenomenon is the rapidly rising housing prices hindering low-skill labor flows to big cities.

Citation

Wang, J. and Huang, W.-C. (2023), "Does the Spatial Mismatch Between Land Supply and Demand Intensify the Spatial Divergence of Human Capital?", Lee, C.-F. and Yu, M.-T. (Ed.) Advances in Pacific Basin Business, Economics and Finance (Advances in Pacific Basin Business, Economics and Finance, Vol. 11), Emerald Publishing Limited, Leeds, pp. 169-199. https://doi.org/10.1108/S2514-465020230000011008