Credit Constraints, Job Mobility and Entrepreneurship: Evidence from a Property Reform in China

May 2012
Shing-Yi Wang
in Review of Economics and Statistics. Vol. 94, No. 2, 532 - 551.

Credit Constraints, Job Mobility and Entrepreneurship: Evidence from a Property Reform in China
This paper provides new evidence on the impact of private property rights and employer-provided housing on entrepreneurship. I find an increase in self-employment following a reform in urban China that allowed state employees who were renting state-owned housing the opportunity to buy their homes at subsidized prices. I develop a model of job choice to test two mechanisms that might explain how the reform increased entrepreneurship. I find evidence that the reform reduced labor mobility costs and alleviated credit constraints by allowing households to capitalize on the value of the real estate.