Empirical test of spatial spillover effect.

This paper analyzes how housing prices affect innovation and entrepreneurship. We construct a city-level panel dataset including 281 cities between 2009 and 2019 by merging housing price data from China Statistical Yearbook for Regional Economy with innovation and entrepreneurship data from Peking University Open Research Data Platform. Our results suggest that housing prices are positively associated with the vitality of innovation and entrepreneurship (VIE). The results remain consistent with a series of robustness checks. We also find that rising house prices promote VIE through the wealth effect and the siphon effect. Spatial effect analysis further shows that housing prices not only positively affect the VIE of local cities, but also positively affect the VIE of neighboring cities. These findings imply the necessity of curbing the excessive rise of housing prices and decoupling public services and benefits related to homeownership.