Abstract
Numerous Chinese families choose to reside together with their elderly parents due to the considerable impacts of conventional values such as filial duty in Chinese society. However, as house prices rocketed up in major Chinese cities over the past decade, this arrangement is facing a sizeable challenge, therefore also raising new research question about it. This paper attempts to investigate the phenomenon of co-residence of adult children with their elderly parents in China. Using the 2013 data of China Household Finance Survey (CHFS), we document that house price is indeed a significant determinant for the pattern of intergenerational co-residence. Our empirical results can provide interesting insights into the important implication of rising house price for household residential arrangements in this country.
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Notes
Xinjiang, Tibet, Macao, Hong Kong and Taiwan are excluded from these provincial regions.
For housing renters, we also use the average self-reported community housing prices to replace their assessment values of housing which they were renting, because their housing valuations are usually less accurate than those of homeowners. Such treatment helps reduce the possible estimation bias caused by their housing assessments and the problem of sample selection bias caused by eliminating the renters from our sample.
We notice that Heckman two-stage approach is not applicable for our case. At the first stage of this approach households need to decide whether to purchase or rent a housing unit, while at the second state they need to choose whether to live together with their elderly parents. However, our research also needs to consider housing renters’ co-residential choices with their elderly parents as we mentioned above, so our research has no such choice problem of buying or renting.
We do not take account of elderly parents’ healthy status in regression. This is because when the elderly parents live together with their adult children, their healthy status might be improved. This will result in the problem of endogeneity in regression caused by the reverse causality between co-residence with elderly parents and their healthy status.
Intergenerational transfer might also matter for household residential decisions. On one hand, high intergenerational transfer may increase the intergenerational closeness and therefore the probability of intergenerational co-residence with elderly parents. On the other hand, however, adult children and their parents are more likely to share their incomes and expenses when living together and therefore raise their intergenerational transfer. Thus, adding the intergenerational transfer to our regression models will cause the endogenous problem of this research.
For more details about probit regression, see for example Wooldridge (2002).
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Acknowledgments
We would like to thank Li Gan, Han Li, Hongyu Liu, Zan Yang, S K Wong and participants at the 2015 Asia Pacific Real Estate Research Symposium for helpful comments. Xiaoying Deng also acknowledges financial support from the National Science Foundation of China (71703095), and Gang-Zhi Fan acknowledges financial support from the National Research Foundation of Korea (NRF-2016S1A5A2A01023242). Any errors are our own.
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Yi, D., Deng, X., Fan, GZ. et al. House Price and co-Residence with Older Parents: Evidence from China. J Real Estate Finan Econ 57, 502–533 (2018). https://doi.org/10.1007/s11146-018-9653-4
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DOI: https://doi.org/10.1007/s11146-018-9653-4