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Entrepreneurship, Economy and Inequality: Evidence from China's Return-Home Policy

Author

Listed:
  • Liu Cui

    (Zhejiang University)

  • Yit Wey Liew

    (Sunway University)

  • Muhammad Habibur Rahman

    (Durham University)

Abstract

This study examines the economic and distributional effects of China's National Pilot Program for Returnee Entrepreneurship, which encourages rural migrants to return to their hometowns for business creation and employment. Drawing on county-level socioeconomic indicators and nationally representative household survey data, we find that the program substantially boosted local economic development. Yet the gains were uneven as household-level analysis reveals a significant rise in within-county inequality. The mechanism operates through unequal access to capital, skills, and risk tolerance, enabling better-endowed households to capture a disproportionate share of the benefits. These findings underscore a key policy trade-off: while returnee entrepreneurship initiatives can stimulate aggregate growth, they may simultaneously exacerbate disparities within rural communities

Suggested Citation

  • Liu Cui & Yit Wey Liew & Muhammad Habibur Rahman, 2025. "Entrepreneurship, Economy and Inequality: Evidence from China's Return-Home Policy," Department of Economics Working Papers 2025_03, Durham University, Department of Economics.
    • Handle: RePEc:dur:durham:2025_03
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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