Human capital, housing prices, and regional economic development: Will "vying for talent" through policy succeed?

This study examines the dynamic agglomeration economies through matching channel between human capital agglomeration, regional economic development, and housing prices. Using data from 31 Chinese provinces from 1999 to 2015, it employs a panel vector auto regression model to study the interactive relationships among these factors. Overall, the results show that human capital agglomeration has a positive long-term influence on housing prices and economic development, and has become a determinant of regional economic growth. Housing prices have a negative long-term influence on economic development. However, human capital accumulation responds positively to housing price in regions other than municipalities. These findings suggest that vie for talent through housing policy might not be effective in underdeveloped regions and could lead to misallocation of government fiscal resources. • Relations among human capital, housing price and economic growth are examined by panel VAR model. • Human capital affects regional economic through labor market effects. • Regional economic affects human capital through its agglomeration and matching. • Housing price affects human capital through wealth effects or crowd-out effects. • Housing price affects regional economic through industrial agglomeration. [ABSTRACT FROM AUTHOR]