The association between settlement intention and migrant entrepreneurship in China: Explanation from human capital and risk aversion

Abstract

In the new era, one of the keys to promoting sustainable economic growth is to give full play to the main role of migrants in innovation and entrepreneurship, and improve the overall employment quality of society. Based on the 2017 China Migrants Dynamic Survey (CMDS) data, this paper attempts to use the reference group theory, self-motivation theory, human capital theory, and risk preference theory to provide the theoretical framework. Then, the relationship between immigrants’intention and entrepreneurship is examined by using PSM, Heckman-two stage model and IV method. The results clearly show that settlement intention is negatively associated with migrant entrepreneurship for both necessity-based entrepreneurship and opportunity-based entrepreneurship. Further study shows that this negative effect is achieved by changing migrants’ human capital and their risk preference. The heterogeneity analysis shows that the negative effect of settlement intention on migrant entrepreneurship is among those migrants who are between 25 and 45 years old, who are female migrants, who have rural hukou, and who live in central and western China. In a sense, this study identifies a side effect of settlement intention that sublimates and complements the theory of migrant entrepreneurship.