Reluctant Entrepreneurs: Evidence from China's SOE Reform / Hanming Fang, Ming Li, Zenan Wu, Yapei Zhang.

Format:

Book

Author/Creator:

Fang, Hanming.

Contributor:

National Bureau of Economic Research.

Li, Ming.

Wu, Zenan.

Zhang, Yapei.

Series:

Working Paper Series (National Bureau of Economic Research) no. w31700.

NBER working paper series no. w31700

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2023.

Summary:

We study the impact of state-owned enterprises (SOEs) on the quality of entrepreneurship in China. Using long series of firm registration and performance data, we document that the massive SOE downsizing in the late 1990s significantly improved the quality of entrepreneur- ship. Compared with entrepreneurs in other time periods, firms founded by the reluctant entrepreneurs induced by the SOE layoffs have better performances. To explain these results, we present a simple model of occupational choices where high-skilled individuals obtain a higher value than low-skilled individuals from the benefits offered by SOE jobs, leading them to select into the SOE sector in the pre SOE reform era. When the SOE sector was downsized, some high-skilled SOE employees were reluctantly unleashed into entrepreneurship. We also provide corroborating evidence for other implications of the model.

Notes:

Print version record

September 2023.