The effect of the spatial misallocation of land supply on entrepreneurial activity

ABSTRACT

Drawing on a unique dataset combining the registration information of over 200 million firms and over 2.1 million land transaction records in China, this study empirically tests how the spatial misallocation of land supply affects entrepreneurial activity. The study shows that the ‘paradox’ of an increase in the government supply of land leading to a decrease in entrepreneurial activity is caused by the spatial misallocation of this land supply. We highlight the importance of the proper spatial allocation of land for promoting entrepreneurial activity.

KEYWORDS:

• Land supply
• spatial misallocation
• entrepreneurial activity
• mortality rate

JEL CLASSIFICATION:

• R14
• R38
• M13

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China [71573171, 71703096, 71572199].