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Promoting or inhibiting: The role of housing price in entrepreneurship

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  • Hu, Mingzhi
  • Su, Yinxin
  • Ye, Wenping

Abstract

Housing prices have been soaring in China since the past decade. Rising housing prices indicate good opportunities in the labor and housing markets, which can discourage the entrepreneurial investment decisions of would-be entrepreneurs. However, high appreciation in housing prices can also relax credit constraints in setting up nascent businesses and thereby encourage entrepreneurship. This study investigates whether rising housing prices have a pulling or pushing effect on entrepreneurial activities. We find that housing price has a diminishingly negative effect on entrepreneurial activities using data from China's Urban Household Survey and China Statistical Yearbook for Regional Economy for the period 2002–2009. The mechanisms underlying why housing price affects entrepreneurship—labor market opportunities, relaxation of credit constraints, and housing market opportunities—are also investigated. Overall, this study offers new insights into entrepreneurial activities and highlights the negative externalities of overheated housing market to entrepreneurship in developing countries.

Suggested Citation

  • Hu, Mingzhi & Su, Yinxin & Ye, Wenping, 2019. "Promoting or inhibiting: The role of housing price in entrepreneurship," Technological Forecasting and Social Change, Elsevier, vol. 148(C).
    • Handle: RePEc:eee:tefoso:v:148:y:2019:i:c:s0040162519304950
    DOI: 10.1016/j.techfore.2019.119732
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    Cited by:

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    4. Xiongbin Lin & Ting Ren & Hao Wu & Youzhi Xiao, 2021. "Housing price, talent movement, and innovation output: Evidence from Chinese cities," Review of Development Economics, Wiley Blackwell, vol. 25(1), pages 76-103, February.

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    More about this item

    Keywords

    Housing price; Entrepreneurship; Labor market; Housing market; China;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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