What types of homeowners are more likely to be entrepreneurs? The evidence from China



This paper highlights a previously undocumented observation regarding the heterogeneity of the association between entrepreneurship and homeownership across ownership through different pathways. Our empirical work based on large individual-level microdata from China’s Urban Household Survey (UHS) suggests that, while owners of market housing do not differ much from renters in terms of the odds of entrepreneurship entry, owners of privatized public housing are associated with significantly less propensity for entrepreneurial engagement and owners of inherited housing are correlated with a much higher prevalence of entrepreneurship. In addition, our empirical findings suggest that the associations between homeownership and entrepreneurial engagement vary with housing value. These findings remain consistent across a wide variety of model specifications, including models controlling for the potential endogeneity between homeownership and entrepreneurship. We provide some preliminary rationalization of these findings and discuss their policy implications.


Homeownership Entrepreneurship Heterogeneity impacts China 

JEL classification

J49 L26 R29 



The authors thank the financial supports from the NSFC-ESRC Joint Funding (NSF7161101095), National Natural Science Foundation of China (NSF71573166 and NSF71173045), and Innovation Foundation of Graduate School of Shanghai University of Finance and Economics (CXJJ-2016-387).

Supplementary material

11187_2017_9976_MOESM1_ESM.docx (17 kb)
ESM 1 (DOCX 17 kb)


  1. Acs, Z. J., & Szerb, L. (2007). Entrepreneurship, economic growth and public policy. Small Business Economics, 28(2), 109–122. Scholar
  2. Adelino, M., Schoar, A., & Severino, F. (2015). House prices, collateral, and self-employment. Journal of Financial Economics, 117(2), 288–306.CrossRefGoogle Scholar
  3. Angrist, J. D., & Pischke, J.-S. (2008). Mostly harmless econometrics: an empiricist’s companion. Princeton: Princeton University Press.Google Scholar
  4. Bernanke, B., & Gertler, M. (1989). Agency costs, net worth, and business fluctuation. American Economic Review, 79(1), 14–31.Google Scholar
  5. Blanchflower, D. G., & Oswald, A. J. (1998). What makes an entrepreneur? Journal of Labor Economics, 16(1), 26–60. Scholar
  6. Blanchflower, D. G., & Oswald, A. J. (2013). Does high home-ownership impair the labor market? NBER Working Paper, 19079.
  7. Bracke, P., Hilber, C., & Silva, O. (2012). Homeownership and entrepreneurship. SERC Discussion Paper, 1–28.
  8. Bracke, P., Hilber, C., & Silva, O. (2014). Homeownership and entrepreneurship: the role of mortgage debt and commitment. CESifo Working Paper Series, 5048, 1–28.Google Scholar
  9. Cagetti, M., & De Nardi, M. (2006). Entrepreneurship, frictions, and wealth. Journal of Political Economy, 114(5), 835–870. Scholar
  10. Cocco, J. F. (2005). Portfolio choice in the presence of housing. Review of Financial Studies, 18(2), 535–567.CrossRefGoogle Scholar
  11. Corradin, S., & Popov, A. (2015). House prices, home equity borrowing, and entrepreneurship. Review of Financial Studies, 28(8), 2399–2428.CrossRefGoogle Scholar
  12. Dai, Z., Maydew, E. L., Shackelford, D. A., & Zhang, H. H. (2008). Capital gains taxes and asset prices: capitalization or lock-in? Journal of Public Economics, 63(2), 709–742.Google Scholar
  13. Disney, R., & Gathergood, J. (2009). Housing wealth, liquidity constraints and self-employment. Labour Economics, 16(1), 79–88. Scholar
  14. Evans, D. S., & Jovanovic, B. (1989). An estimated model of entrepreneurial choice under liquidity constraints. Journal of Political Economy, 97(4), 808–827.CrossRefGoogle Scholar
  15. Evans, D. S., & Leighton, L. S. (1989). Some empirical aspects of entrepreneurship. The American Economic Review, 79(3), 519–535.Google Scholar
  16. Feng, S., Hu, Y., & Moffitt, R. (2015). Long run trends in unemployment and labor force participation in China. National Bureau of Economic Research Working Paper Series, No. 21460.
  17. Glaeser, E. L., Rosenthal, S. S., & Strange, W. C. (2010). Urban economics and entrepreneurship. Journal of Urban Economics, 67(1), 1–14. Scholar
  18. Hamilton, B. H. (2000). Does entrepreneurship pay? An empirical analysis of the returns to self-employment. Journal of Political Economy, 108(3), 604–631.CrossRefGoogle Scholar
  19. Henley, A. (2004). House price shocks, windfall gains and hours of work: British evidence. Oxford Bulletin of Economics and Statistics, 66(4), 439–456. Scholar
  20. Holtz-Eakin, D., Joulfaian, D., & Rosen, H. S. (1994). Entrepreneurial decisions and liquidity constraints. The Rand Journal of Economics, 25(2), 334–347.CrossRefGoogle Scholar
  21. Huang, Y. (2004). The road to homeownership: a longitudinal analysis of tenure transition in urban China (1949–93). International Journal of Urban and Regional Research, 28(4), 774–795. Scholar
  22. Hurst, E., & Lusardi, A. (2004). Liquidity constraints, household wealth, and entrepreneurship. Journal of Political Economy, 112(2), 319–347. Scholar
  23. Imbens, G. W., Rubin, D. B., & Sacerdote, B. I. (2001). Estimating the effect of unearned income on labor earnings, savings, and consumption: evidence from a survey of lottery players. The American Economic Review, 91(4), 778–794.CrossRefGoogle Scholar
  24. Jensen, T. L., Leth-Petersen, S., & Nanda, R. (2014). Housing collateral, credit constraints and entrepreneurship: evidence from a mortgage reform. NBER Working Paper Series, 20583, 1–46. Scholar
  25. Li, L., & Wu, X. (2014). Housing price and entrepreneurship in China. Journal of Comparative Economics, 42(2), 436–449. Scholar
  26. Li, H., Shi, X., & Wu, B. (2015). The retirement consumption puzzle in China. American Economic Review: Papers and Proceedings, 105(5), 437–441.CrossRefGoogle Scholar
  27. Liang, J., Wang, H., & Lazear, E. P. (2014). Demographics and entrepreneurship. NBER Working Paper Series, 20505, 1–67. Scholar
  28. Moskowitz, T. J., & Vissing-Jørgensen, A. (2002). The returns to entrepreneurial investment: a private equity premium puzzle? American Economic Review, 92(4), 745–778.CrossRefGoogle Scholar
  29. Naudé, W. (2011). Entrepreneurship and economic development: an introduction. In W. Naudé (Ed.), Entrepreneurship and economic development (pp. 3–17). London: Palgrave Macmillan UK. Scholar
  30. Oswald, A. J. (1996). A conjecture on the explanation for high unemployment in the industrialized nations: Part 1. Warwick Economic Research Papers, (475).Google Scholar
  31. REICO (2012). China Real Estate Market Report 2011–2012 (in Chinese).Google Scholar
  32. Reuschke, D. (2016). The importance of housing for self-employment. Economic Geography, 92(4), 378–400. Scholar
  33. Reuschke, D., & Maclennan, D. (2014). Housing assets and small business investment: exploring links for theory and policy. Regional Studies, 48(4), 744–757. Scholar
  34. Schmalz, M. C., Sraer, D. A., & Thesmar, D. (2017). Housing collateral and entrepreneurship. The Journal of Finance, 72(1), 99–132.
  35. Selmi, I., & Haddad, S. (2013). Individual determinants of entrepreneurship. In E. G. Carayannis (Ed.), Encyclopedia of creativity, invention, innovation and entrepreneurship (pp. 913–916). New York: Springer New York. Scholar
  36. Taylor, M. P. (1996). Earnings, independence or unemployment: why become self-employed? Oxford Bulletin of Economics and Statistics, 58(2), 253–266. Scholar
  37. Wang, S.-Y. (2012). Credit constraints, job mobility, and entrepreneurship: evidence from a property reform in China. The Review of Economics and Statistics, 94, 532–551. Scholar
  38. Wang, C., Wang, N., & Yang, J. (2012). A unified model of entrepreneurship dynamics. Journal of Financial Economics, 106(1), 1–23. Scholar
  39. Wei, S.-J., Zhang, X., & Liu, Y. (2012). Status competition and housing prices: some evidence from China (No. 18000). Cambridge.Google Scholar

Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.School of Public Economics and AdministrationShanghai University of Finance and EconomicsShanghaiChina

Personalised recommendations