Housing reform in urban china - efficiency, distribution and the implications for social-security

We investigate the distribution of a measure of housing consumption among public tenants in cities of two Chinese provinces, using household survey data. We find the resulting distribution roughly consistent with the outcome of a market rental system, for fixed supply and CES preferences. There is surprisingly little evidence of allocative inefficiency in the present bureaucratic allocation system. We estimate the possible effects of market-oriented housing reform. Under alternative assumptions about the system of cash transfers used to compensate for a move to market rents, we investigate the distributional impact of reform and the likely need for supplementary cash benefits for low-income households.