Influencing Mechanism of Rural Households’ Livelihood Capital on Entrepreneurial Behavior: Evidence from the CFPS

Abstract

The livelihood capital of rural households is an essential basis for their selection of livelihood strategy. This paper uses rural household data from the 2018 CFPS to construct a “hexagonal” framework for the analysis of livelihood capital. Natural capital, material capital, financial capital, social capital, human capital, psychological capital, and total livelihood capital are measured using entropy weight method. The paper uses logit and tobit models to analyze how livelihood capital affects rural households’ entrepreneurship. Finally, the heterogeneous impact of livelihood capital on rural households’ entrepreneurial behavior is discussed from the view of household head gender, household education level, and regional differences. The results show that rural households’ livelihood capital distribution in each dimension is uneven and the difference is great. Rural households’ capital of livelihood and finance have positive effects on their entrepreneurial behavior. Heterogeneity analysis shows that the increase in livelihood capital impacts entrepreneurship in female-headed households more positively and significantly. Livelihood capital can significantly promote the entrepreneurial behavior of rural households with lower education levels. The impact of livelihood capital on rural household entrepreneurship presents a decreasing distribution pattern from east to the middle to west. The results of the robustness test show that the conclusion of the positive impact of livelihood capital on rural household entrepreneurship is reliable. The main conclusions provide guidance and a foundation for further optimizing rural household entrepreneurship policies and promoting rural household entrepreneurship.