Abstract
This paper investigated the association between life-cycle factors and entrepreneurship. We provided a comprehensive investigation into life-cycle factors, such as marriage, health, education, age, previous labor market experience, and gender of children. Moreover, we focused on rural persons, who are confronted with a disadvantageous entrepreneurial environment. We found that marriage was positively associated with the likelihood of entrepreneurship, and the association existed only among rural men. Educated persons and healthy persons were more likely to engage in entrepreneurial activities. In particular, previous hospitalization experience and high medical expenses were negatively associated with entrepreneurship, while minor health problems were not correlated with entrepreneurship. Concerning the gender of children, daughters instead of sons were positively correlated with entrepreneurial probability, and the correlation was stronger and more significant among rural men. Our results could be useful for policymakers seeking to incentivize entrepreneurship among rural residents in developing countries.
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Notes
In this paper, we used self-employment and entrepreneurship interchangeably to refer to the choice of entrepreneurial occupations. We distinguished self-employed persons from business owners in the empirical analysis in Section 5.2.1.
In 2018, the total population in China was approximately 1.40 billion, among which over 564 million were rural residents (National Bureau of Statistics of China 2019).
The literature on the returns to entrepreneurship does not provide a conclusive result (Evans and Leighton 1989; Hamilton 2000; Manso 2016; Levine and Rubinstein 2017). Among disadvantaged families, similar to the rural households in our sample, self-employed persons were likely to earn more than wage workers (Fairlie 2004&2005; Lofstrom 2013). Previous studies on China found that entrepreneurs earned more than workers (Giulietti et al. 2012; Cui et al. 2013). In Table 10, we reported an income advantage of entrepreneurs in our sample.
The relationship between health and entrepreneurship is not conclusive (Simoes and Crespo 2016). Some studies found a positive association between poor health conditions and the self-employment choice (Zissimopoulos and Karoly 2007; Jones and Latreille 2011). Hatak and Zhou (2019) summarized the studies on the effects of health on entrepreneurship.
The first year of the national CFPS survey was 2010. The survey in the following years adopted a different questionnaire, so we were unable to define entrepreneurship in the same manner. Thus, we used the cross-sectional data from 2010 rather than the panel survey.
The New Rural Cooperative Medical Insurance System is a rural medical mutual aid system that is organized, guided, and supported by the government. Rural individuals who join this medical insurance can obtain reimbursement for medical care whenever they need it.
The New Rural Pension System, initiated in late 2009, provides a personal pension account that establishes a lifetime record for each participant. Rural residents can obtain their pension once they reach retirement age.
Here, we use the ratio of households covered by the Rural Security System for Low-Income Households, which provides social security to low-income households facing difficulties due to sickness, inability to work and poor living conditions.
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We thank the anonymous referees for their helpful comments.
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This study is financed by the National Natural Science Foundation of China (grant no. 71603213 and 71703043).
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Xiao, W., Wu, M. Life-cycle factors and entrepreneurship: evidence from rural China. Small Bus Econ 57, 2017–2040 (2021). https://doi.org/10.1007/s11187-020-00370-8
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