Medium-Term Impact of COVID-19 Pandemic on Household Entrepreneurship in China

Abstract

ABSTRACT This study investigates the medium-term impacts of the COVID-19 pandemic on household entrepreneurship in China, utilizing data from the 2015–2021 China Household Finance Survey. Employing a generalized Difference-in-Differences (DiD) methodology, we find that the pandemic has significantly dampened household entrepreneurship one year after its initial outbreak in China. Our analysis suggests that this decline is largely attributable to heightened risk aversion and increasingly pessimistic outlooks on the future. Moreover, our heterogeneity analysis reveals that this adverse effect predominantly impacts individuals with lower educational levels, the elderly, and those in regions with inadequate digital and financial infrastructure. These findings offer vital insights for policymakers aiming to rejuvenate household entrepreneurship in the aftermath of the pandemic.