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Amenities, Housing Affordability, and Education Elites

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Abstract

Education Elites (i.e., higher-educated people) with new ideas and technologies are widely acknowledged to be a source of innovation and the engine of regional economic growth. A city that can attract higher-educated people will ultimately become the winner of future. This paper examines whether city amenities attract higher-educated people. Using three different datasets from China, we find that people with college degree or above are much more likely to choose the best amenity cites, which in fact results in 68.4% increase in the concentration of these higher-educated people. In addition, we find that people with master degree or above education can enjoy 45.61 percent income premium in the best amenity cities, and people with four-year college education can also enjoy 30.68 percent income premium. Furthermore, we find that these higher-educated people have much higher satisfaction on income and job promotion opportunity. However, with prices soaring in the best amenity cities, housing becomes increasingly unaffordable. In fact, we find strong evidence that the attractiveness of the best amenity cities has declined over time. This finding suggests that policies that curb the rapid increase in housing prices in the best amenity cities are necessary for local governments in order for their cities continuing to be the winner of future.

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Notes

  1. 68.4% is obtained by calculating the ratio of 5.4% to 7.9%, i.e., 5.4%/7.9%=68.4%.

  2. We would like to thank Seow Eng Ong, K. W. Chau, X. H. Bao, Jing Wu and Chengdong Yi for their insightful comments on this issue.

  3. 67.09%=(13.2%-7.9%)/7.9%.

  4. Hukou refers to the household residential registration. Under the household registration (hukou) system, citizen with hukou are eligible for specific local benefits, including access to health care, free public education, housing, better access to job, which citizens without hukou are not (Au and Henderson, 2006).

  5. 1) 68.4% is obtained by calculating the ratio of 5.4% to 7.9%, i.e., 5.4%/7.9%=68.4%.

  6. Unfortunately, the households in UHS 2007-2009 are completely different from those in UHS 2002-2006.

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Acknowledgements

Mingzhi Hu acknowledges the supports from the National Natural Science Foundation of China (72104088 and 72074097), the Natural Science Foundation of Guangdong Province (2020A1515010359), the Key Project of Natural Science Foundation of Zhejiang Province (LZ20G030002), and the Major Research Project of Philosophy and Social Sciences of the Ministry of Education (18JZD033)

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Authors and Affiliations

  1. School of Management, Chinese Academy of Housing and Real Estate, Zhejiang University of Technology, Hangzhou, China

    Mingzhi Hu

  2. Hollo School of Real Estate, College of Business, Florida International University, Florida, USA

    Zhenguo Lin

  3. Department of Finance, Insurance, Real Estate and Law, G. Brint Ryan College of Business, University of North Texas, Texas, USA

    Yingchun Liu

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  1. Mingzhi Hu
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Correspondence to Zhenguo Lin.

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Hu, M., Lin, Z. & Liu, Y. Amenities, Housing Affordability, and Education Elites. J Real Estate Finan Econ 66, 141–168 (2023). https://doi.org/10.1007/s11146-022-09896-y

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