The Impact of Housing Policy on the Settlement Intentions of Rural-Urban Migrants in China: Revisiting the Welfare Magnet Hypothesis

Background: Do generous welfare benefits attract and retain low-skilled migrants? Although the “welfare magnet hypothesis” has long been debated, rigorous empirical studies from non-Western contexts are very rare. As China enters a new phase of urbanization, it has begun to adopt more inclusive policies to extend local social welfare to internal migrants. This study investigates the housing policies on rural-urban migrants’ long-term settlement intentions, sense of belonging and housing conditions as well as the heterogeneous impact by migrant characteristics. This study adds to the classic welfare magnetism debate. Previous studies investigating welfare policy and internal migration have mainly focused on its impact on migration flows in high-income contexts. This study enriches the literature by examining the impact of welfare policy on retaining internal migrants (e.g., long-term settlement intentions) in an upper-middle-income country. In particular, we examine the impact of housing policy, which has received little attention in the existing literature that focuses on public assistance programs and health policies.

Method: Data on city-level migrant housing policies were extracted from the study by Peng and Wang (2022). They examined migrant housing policy efforts in 97 prefectural cities in China. Four housing policy clusters were identified: residual approach (low policy score in each area), public and private rental approach (higher policy score in specific public rental housing and commercial rental housing areas), collective rental approach (higher scores in collective rental housing types such as low-rent housing and dormitories), and citizenship-oriented approach (higher scores in ownership housing and public rental housing. The individual-level data were drawn from the 2012, 2013, 2014, 2016, and 2017 waves of the China Migrants Dynamic Survey (CMDS, N=199,524). Long-term settlement intention is measured by the question “Do you intend to stay in the destination city in the long-term?” Sense of belonging is measured by the following three statements such as “I love the city I live in”. Indicators of housing-related outcomes include home ownership and rent-to-income ratio. We exploit city variation in the timing of housing policy announcements and policy efforts to investigate the effects of migrant housing policies on rural-urban migrants’ outcomes and control for year, destination city-specific time trend and sending province-fixed effects. Standard errors were clustered at the destination city level.

Results: We find that housing policies do not affect migrants’ settlement intentions and housing outcomes (e.g., homeownership and rent-to-income ratios). It does, however, affect migrants’ sense of belonging to destination cities. Cities with greater housing policy efforts (citizenship-oriented approach) increase migrants’ sense of belonging more than their counterparts with less effort (residual approach and rental approach).

Conclusions and Implications: This study not only contributes to a better understanding of welfare magnetism in a non-Western context, but also advances knowledge on how housing affects migrants’ settlement intentions. Moreover, it facilitates policy-making to further promote people-oriented urbanization in China.