# Effects of housing demolition on health and medical utilization: evidence from China

## TL;DR

Housing demolition in China increases medical costs two years later, especially for rural residents, despite no change in health ratings or mental health.

## Contribution

This study provides empirical evidence on the long-term health and medical cost impacts of housing demolition in China.

## Key findings

- Housing demolition increased medical expenditure by 1,639 CNY two years later.
- Rural residents had higher medical use and costs after demolition, while urban residents had lower use four years later.
- No significant effects on self-rated health or mental health were found.

## Abstract

China’s fast economic growth has been accompanied by rapid urbanization and urban renewal. Millions of households have experienced housing demolition and relocation (“chaiqian”) to vacate the land for urban renewal and infrastructure projects. Housing demolition can be a major life disruption and place a considerable burden on both mental and physical health. Meanwhile, replacement housing, provided as compensation for demolition, can improve housing quality and access to care, thus improving health.

Using data from the China Family Panel Studies and an event study model with a staggered difference-in-differences framework, we examined the effects of housing demolition on individuals’ medical utilization in the year of demolition, as well as two and four years afterward. Medical utilization was measured as whether an individual uses medical services (incurring medical expenditure) and the amount of medical expenditure if using medical services. We also explored the effects of housing demolition on health measures, namely self-rated health and mental health status, as potential mechanisms through which housing demolition affects medical utilization.

Overall, housing demolition did not affect whether an individual used medical services. However, conditional on using medical services, housing demolition increased the amount of medical expenditure by approximately 1,639 CNY (234 USD) two years after demolition. We did not find evidence that housing demolition is associated with self-rated health or mental health status. Moreover, we found urban-rural heterogeneity in the effects of housing demolition. Rural residents have a higher likelihood of using medical services and higher medical expenditure two years after demolition, while urban residents have a lower likelihood of using medical services four years after demolition.

Our findings highlight the importance of housing as a social determinant of health and contribute to the growing literature on development-induced displacement. The increased medical expenditure after housing demolition calls for a multidimensional evaluation of compensation for housing demolition. The compensation should consider both the loss of property itself and other associated adverse impacts, such as on health and medical care, to fully offset the burden of housing demolition, especially for rural residents who are particularly vulnerable after housing demolition.