Three essays on urban economics

Abstract

This thesis delves into significant urban issues in contemporary China. Chapter 1 explores the determinants and economic efficiency of state-led urbanization, focusing on China’s skyscraper development. Employing a political economy lens, this chapter documents that local governments subsidized skyscraper development through discounted land prices. This chapters exploit a quasi-experimental research design to evaluate whether these subsidies pay off in the future by generating positive spatial spillovers. This chapter reveals that, 5 to 10 years after completion, subsidized skyscrapers yield few spatial spillovers in land price premium, new business formation, or urban amenities, compared to unsubsidized ones. The underlying mechanisms behind the lack of spillover around subsidized projects include poor location, less reliable developers, and inadequate infrastructure. Chapter 2 develops a quantitative framework to estimate housing costs and assess how they vary between Chinese cities. By comparing housing costs to nominal income gains, this chapter evaluates regional disparities in real income for both high-and low-skilled households. This chapter documents that real income presents a bell-shaped pattern as one moves, particularly for low-skilled households, to larger cities. This chapter provides evidence that relaxing land use regulation reduces housing costs, therefore inducing larger real gains for non-landowner workers. These findings carry significant policy implications about spatial misallocation, and more broadly, spatial inequality. Chapter 3 develops a theoretical framework that highlights the tradeoffs of the presale policy: presale enables developers’multitasking but leads to unfinished projects if without proper supervision. Empirically, this chapter constructs a novel dataset of unfinished projects, presale policies, and land auction outcomes across 270 major cities of China. This chapter documents that both presale criterion and postsale construction cost supervision relate to a lower probability of unfinished projects. But only presale criterion relates negatively to the pace of new housing development. A back-of-the-envelope calculation suggest that the average bundle of current presale policies falls short of the Pareto frontier in our sample.

Date of Award	2024
Original language	English
Awarding Institution	The Hong Kong University of Science and Technology
Supervisor	Jin WANG (Supervisor) & Yatang LIN (Supervisor)