Abstract
A previously undocumented association between city-level degree of hukou-based labor market discrimination and migrant’s individual entrepreneurship engagement is examined. Applying the Oaxaca–Blinder decomposition analysis on the micro data from the China Migrants Dynamic Survey (CMDS) suggests that hukou-based labor market discrimination can on average explain a 6.3% differential in personal income for rural migrants relative to otherwise identical urban migrants. A one standard deviation increase in a city’s average hukou-based labor market discrimination is associated with roughly 2.9 percentage point higher of entrepreneurship rate among rural migrants, holding other things equal. Furthermore, city-level hukou-based labor market discrimination is associated with much higher propensity for engagement in necessitybased entrepreneurship compared with opportunity-based entrepreneurship. Our empirical work also suggests that the association between city-level hukou discrimination and migrant entrepreneurship is more prominent for people with middle level of education, young people, married people, and renters. Policy implications of these findings are discussed.
Highlights
Entrepreneurial activeness are crucial for both national economic prosperity and regional competitiveness (Naudé, 2011; Parker, 2005; Stephens et al, 2013)
We investigate the effect of hukou discrimination on two types of entrepreneurship and find that rural migrants are largely pushed into entrepreneurship out of necessity, rather than pulled into this endeavor out of choice to take advantage of some business opportunity
City-level hukou discrimination, rural migrants are more likely to engage into entrepreneurship, while urban migrants do not change much in terms of the probability of entrepreneurship entry
Summary
Entrepreneurial activeness are crucial for both national economic prosperity and regional competitiveness (Naudé, 2011; Parker, 2005; Stephens et al, 2013). The existing studies have found that personal entrepreneurial propensity is associated with many region-specific contextual factors, such as institution, culture, financial constraint and group-specific social resource (Acs et al, 2008; Guo & Miller, 2010; Simoes et al, 2016; Westlund & Bolton, 2003) This paper extends the literature on the association between regional contextual factors and individual’s entrepreneurship mainly in three aspects It estimates the aggregatelevel discrimination extent of local labor market, where existing literature estimates either individual-level or group-level discrimination extent.
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