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Urban housing demolition and entrepreneurship in China

Author

Listed:
  • Xinheng Li

    (Zhejiang University)

  • Tao Fu

    (Zhejiang University)

Abstract

Drawing on data from the China Household Finance Survey (CHFS), this paper explores the impact of urban housing demolition on entrepreneurship. Exploiting urban housing demolition as a quasi-natural experiment to overcome the potential endogeneity concerns, we find that urban housing demolition boosts overall entrepreneurship by 4.5 percentage points. We also find that the positive impact on entrepreneurship is mainly driven by younger individuals, those with higher education, non-cadre individuals, and residents of eastern China. The mechanisms analysis reveals that urban housing demolition increases household total assets and reduces the entrepreneurs’ demand for bank loans. However, the wealth windfalls do not boost entrepreneurship in the long run, nor do the entrepreneurial activities induced by demolition significantly contribute to employment growth.

Suggested Citation

  • Xinheng Li & Tao Fu, 2025. "Urban housing demolition and entrepreneurship in China," Empirical Economics, Springer, vol. 69(2), pages 891-914, August.
    • Handle: RePEc:spr:empeco:v:69:y:2025:i:2:d:10.1007_s00181-025-02751-y
    DOI: 10.1007/s00181-025-02751-y
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    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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