Security over Enterprise? Functional Differentiation of Property Rights and Farmer Entrepreneurship: Evidence from Homestead Rights Confirmation in China

Rural property rights reform is considered paramount for mobilizing land resources and promoting rural entrepreneurship. However, the outcomes of tenure clarification depend on the role of the land in household livelihoods. The study focuses on China’s homestead rights confirmation and examines its effects on farmer entrepreneurship. The analysis is based on data from 2337 households in Jiangsu Province from the 2020 China Land Economic Survey. The application of Probit and endogenous switching Probit models yielded the following finding: confirming homestead rights reduces the probability of farmer entrepreneurship by approximately 11.4 percentage points. This decline can be attributed to several factors, including a decrease in homestead utilization, a shift towards lower-investment-risk preferences, an increase in entrepreneurial risk perception, and a contraction in entrepreneurial social networks. Collectively, these factors contribute to a reshaping of households’ risk evaluation and asset allocation. The negative impact is primarily observed among households with higher dependency ratios, poorer housing conditions, older heads of household, and those residing in less developed areas. The findings indicate that the consequences of property rights confirmation are characterized by institutional and functional specificity, thereby underscoring the necessity for measures that promote land transfer, exit, and risk-sharing to harmonize tenure reform with entrepreneurship.