House price co-movement and labor migration: Evidence from China

This paper investigates the effect of house price co-movement on inter-city labor migration, leveraging China's unique institutional background. We construct a shift-share instrumental variable (IV) for house price co-movement, using pairwise banking integration as a source of exogenous variation. We find that at household level, house price co-movement facilitates inter-city labor migration, particularly for migrants with a stronger incentive to hedge against housing consumption risk. At city-pair level, house price co-movement also positively affects migration flows. Hence, as housing market interventions become increasingly city-specific, policymakers should take measures to prevent the deterrence of labor mobility.