The long-run effects of housing location on travel behavior: Evidence from China's housing reform

Many cities in developing countries are experiencing rapid urbanization along with deteriorating traffic congestion and air quality, so it is important to understand what affects travel demand in developing countries. In this paper, we study how housing location affects travel behavior in Beijing, a city in a developing country. We use subsidized housing as a source of variation for housing location—individuals in subsidized housing live much closer to the city center than individuals in the control group. We exploit a change in the eligibility for subsidized housing generated by China's housing reforms to address the potential endogeneity of subsidized housing. We find that subsidized housing substantially reduces distances traveled for commuting and discretionary trips and that subsidized individuals are less likely to drive but have similar rates of automobile ownership. The results suggest that housing location can have long-lasting effects on travel behavior and automobile use in a developing country. We discuss policy implications of these findings.