Migrant Entrepreneurship: The Family as Emotional Support, Social Capital and Human Capital

ABSTRACT

We examine how entrepreneurship among migrants in urban China is affected by household composition. Using microdata from the 2016 Chinese Labor-force Dynamics Survey, we find that after controlling for observables and regional-fixed effects, the probability of entrepreneurship increases by 1.4 percentage points for a one-unit increase in the number of family members living together. Such percentage points indicate a 7.87% increase in entrepreneurship rate relative to the national average. Results are robust to several specifications. We also provide explanations for the positive effect of family on entrepreneurship through which family provides emotional support, enhances social capital, and facilitates pooling of labor power.

KEYWORDS:

• Family
• migrant entrepreneurship
• emotional support
• social capital
• human capital

JEL:

• D10
• M13
• R23

Notes

1. In China, hukou is a unique registered residency in the government monitoring system (Chen and Han 2014). Every household in China is required to have a registered residency with a local government authority. There exist four types of people based on the registered residency, including local urban (non-agricultural) hukou, local rural (agricultural) hukou, non-local urban (non-agricultural) hukou and non-local rural (agricultural) hukou (Song 2014). Respondents in the CLDS are asked where their hukou is registered. We restrict our attention to the migrants whose hukou type is non-local, either urban or rural.

2. Individuals are either pushed into entrepreneurship out of necessity or pulled into entrepreneurship out of opportunity (Kautonen and Palmroos 2010; Xavier-Oliveira, Laplume, and Pathak 2015). Pull motivations arise from a variety of aspects, including the need for approval, need for independence, need for personal development, need for welfare improvement, perceived instrumentality of wealth, tax reduction and indirect benefits, and following role models (Birley and Westhead 1994). Push motivations include unemployment, family pressure and job dissatisfaction (Hisrich and Brush 1986; van der Zwan et al. 2016). Necessity-based entrepreneurship implies that a person has not had any other viable option available on the labor market than to start up in business; opportunity-based entrepreneurship refers that the business start-up is based on the exploitation of a perceived business opportunity (Kautonen and Palmroos 2010).

3. See further information about CLDS in http://css.sysu.edu.cn.

4. In China, hukou is a unique registered residency in the government monitoring system (Chen and Han 2014). Every household in China is required to have a registered residency with a local government authority, either urban or “non-agricultural” hukou or rural or “agricultural” hukou (Tang and Coulson 2017). Many resources and benefits, including access to health care, free public education, housing, and access to jobs, are restricted to local residents with urban hukou (Au and Henderson 2006; Glaeser et al. 2017).

Additional information

Funding

This work was supported by The Program for China Postdoctoral Science Foundation 495 (No. 2019M651511), The Provincial Foundation for Excellent Young Talents of Colleges and Universities of Anhui Province (No. gxyq2017089), The Program for Scientific Research at Chuzhou University (No. 2018qd12), The Key Project of Enterprise Development and Transformation for Guangdong-Hong Kong-Macao Greater Bay Area (No. 2019GBAZD05), and National Natural Science Foundation of China (No. 71871215; No. 71902072).