Housing Debt and Home‐Work Separation: Evidence From China

ABSTRACT This paper investigates the impact of housing debt, measured by loan‐to‐value (LTV) ratios, on the separation between homeowners' residences and workplaces. Using data from the China Family Panel Studies (CFPS), we find that housing debt significantly increases home‐work separation, after controlling for various demographic characteristics, socioeconomic factors, and individual‐ and year‐specific effects. These results are robust to the endogeneity issue, the inclusion of unobservable time‐varying provincial‐specific factors, sample selection bias, and the exclusion of irrational homeowners. Furthermore, we find that the positive effect of housing debt on home‐work separation is particularly pronounced among low‐ and medium‐skilled homeowners. We also observe a significant positive relationship between home‐work separation and homeowners' job income. Overall, our findings highlight that homeowners with higher leverage are more likely to experience home‐work separation due to the burden of mortgage repayments, which may lead them to seek high‐paying jobs that involve longer commuting distances.