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The Review of Economics and Statistics 2024

The Unintended Consequences of Home-Buying Restriction in China

Yunjie Chen1; Yongzheng Liu2; Hailun Wei3

1 School of Public Finance and Taxation, Center for International Cooperation and Disciplinary Innovation of Income Distribution and Public Finance (111 Center), Zhongnan University of Economics and Law · 2 China Financial Policy Research Center, School of Finance, Renmin University of China · 3 School of Economics, Jinan University

Abstract

We investigate the fake divorce activities associated with the home-buying restriction policy in China. We find that the policy increased divorce rate (marriage restoration rate) in the treated cities by 0.436 (0.195) permillage point relative to the control cities. This explains a 19.9% increase in the overall national divorce rate, of which at least 45% can be interpreted as fake divorces. Moreover, we find that the main responders to this policy are people who are older, childless, less-educated, and wealthier. Finally, we show that the fraudulent behavior has significant implications for market efficiency, intra- and inter-household wealth inequality, and other consequences.

DOI
10.1162/rest_a_01480
Pages
1-45
Language
en
Sources
openalex crossref

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