Do Housing Regulations Affect Child Development? Evidence and Mechanisms

This study analyzes the effects of housing policies on child development. By exploiting the policy-induced discontinuity in house size in China, we find that favorable housing policies significantly reduce children’s cognitive skills, lessen their beliefs in an internal locus of control, and decrease their self-esteem but have little impact on their physical health or depression symptoms. The heterogeneous analyses show that children at a critical stage of skill formation, girls and children with longer exposure respond more strongly to housing policies. Furthermore, our mechanism decomposition shows that parenting skills play a large role in the effect of housing wealth on child development.