Small Business Economics

, Volume 53, Issue 3, pp 813–837 | Cite as

Regional differences in self-employment in China

  • Bei Luo
  • Terence Tai-Leung ChongEmail author


This paper investigates the impact of personal characteristics and institutional environment on the decision to be self-employed in China. It is shown that a difference in the likelihood of being self-employed exists between urban and rural areas. Our results show that institutional differences between rural and urban areas influence self-employment decisions. Factors that exert a consistent impact regardless of the local institutional environment are marriage, education, money spent on weddings and gifts, economic openness, and accessibility of information. The impact of other factors differs across rural and urban areas. These factors include family ownership of real estate, experience, gender, population density, the management capacity of local government, and the development of private economy in the local community.


Self-employment Occupational choice Institutional environment Economic development 

JEL classifications

J24 L26 O12 



This research uses data from the China Health and Nutrition Survey (CHNS). We owe much to James Kung, Dennis Tao Yang, and the two anonymous reviewers for their very helpful comments. We are also very much indebted to Min Chen, Margaret Loo, Sophia Lok, Yingshi Chen, and Mandy Cheung for their assistance in the research. Any remaining errors are ours.

Funding information

We thank the National Institute of Nutrition and Food Safety, the Chinese Center for Disease Control and Prevention, the Carolina Population Center (5R24 HD050924), the University of North Carolina at Chapel Hill, the National Institutes of Health (NIH) (R01-HD30880, DK056350, R24 HD050924, and R01-HD38700), and the Fogarty International Center for financial support in collecting the CHNS data and the analysis files from 1989 to 2011 and future surveys.


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Authors and Affiliations

  1. 1.Division of Business and ManagementBeijing Normal University–Hong Kong Baptist University United International CollegeZhuhaiChina
  2. 2.Lau Chor Tak Institute of Global Economics and Finance and Department of EconomicsThe Chinese University of Hong KongSha TinHong Kong

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