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Dual-track in the family: How spousal state employment fuels entrepreneurship

Author

Listed:
  • Li, Wenchao
  • Lin, Yifan
  • Yi, Junjian
  • Zhang, Haochen

Abstract

China’s rapid growth alongside extensive state ownership challenges theories of state-sector inefficiency. This paper identifies a novel micro-level channel: “dual-track in the family,” whereby one spouse’s stable state job enables the other to pursue private entrepreneurship. Using a triple-difference design that exploits the 1993 market reform, we find that spouses of state employees were 9.8 percentage points more likely to become entrepreneurs after the reform. Mechanism evidence suggests that spousal state employment may promote entrepreneurship by insuring the family against risk. The findings reveal how a gradualist, dual-track transition can succeed partly by leveraging state-sector stability to underpin private-sector dynamism.

Suggested Citation

  • Li, Wenchao & Lin, Yifan & Yi, Junjian & Zhang, Haochen, 2027. "Dual-track in the family: How spousal state employment fuels entrepreneurship," Journal of Development Economics, Elsevier, vol. 184(C).
    • Handle: RePEc:eee:deveco:v:184:y:2027:i:c:s0304387826001823
    DOI: 10.1016/j.jdeveco.2026.103899
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    Keywords

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    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • P23 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Factor and Product Markets; Industry Studies; Population
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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