IDEAS home Printed from https://ideas.repec.org/p/dur/durham/2025_03.html

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
    as

    Download full text from publisher

    File URL: https://www.durham.ac.uk/business/media/durham-university-business-school/about-us/departments/economics-and-finance/working-papers-pdfs/EconWP25_03.pdf
    File Function: main text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Halvarsson, Daniel & Korpi, Martin & Wennberg, Karl, 2018. "Entrepreneurship and income inequality," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 275-293.
    2. Antman, Francisca M., 2011. "The intergenerational effects of paternal migration on schooling and work: What can we learn from children's time allocations?," Journal of Development Economics, Elsevier, vol. 96(2), pages 200-208, November.
    3. Kakwani, Nanak, 1984. "The Relative Deprivation Curve and Its Applications," Journal of Business & Economic Statistics, American Statistical Association, vol. 2(4), pages 384-394, October.
    4. Chang, Hongqin & Dong, Xiao-yuan & MacPhail, Fiona, 2011. "Labor Migration and Time Use Patterns of the Left-behind Children and Elderly in Rural China," World Development, Elsevier, vol. 39(12), pages 2199-2210.
    5. Dustmann, Christian & Kirchkamp, Oliver, 2002. "The optimal migration duration and activity choice after re-migration," Journal of Development Economics, Elsevier, vol. 67(2), pages 351-372, April.
    6. Piracha, Matloob & Vadean, Florin, 2010. "Return Migration and Occupational Choice: Evidence from Albania," World Development, Elsevier, vol. 38(8), pages 1141-1155, August.
    7. Kakwani, Nanak, 1984. "The Relative Deprivation Curve and Its Applications: Reply," Journal of Business & Economic Statistics, American Statistical Association, vol. 2(4), pages 400-405, October.
    8. Sun, Liyang & Abraham, Sarah, 2021. "Estimating dynamic treatment effects in event studies with heterogeneous treatment effects," Journal of Econometrics, Elsevier, vol. 225(2), pages 175-199.
    9. Sharon G. M. Koh & Grace H. Y. Lee & Eduard J. Bomhoff, 2020. "The income inequality, financial depth and economic growth nexus in China," The World Economy, Wiley Blackwell, vol. 43(2), pages 412-427, February.
    10. Shin, Inyong, 2012. "Income inequality and economic growth," Economic Modelling, Elsevier, vol. 29(5), pages 2049-2057.
    11. Wang, Yan & Conesa, Juan Carlos, 2022. "The role of demographics and migration for the future of economic growth in China," European Economic Review, Elsevier, vol. 144(C).
    12. Bebonchu Atems & Grayden Shand, 2018. "An empirical analysis of the relationship between entrepreneurship and income inequality," Small Business Economics, Springer, vol. 51(4), pages 905-922, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hao, Yunping & Zhang, Bing, 2024. "The impact of digital financial usage on resident’s income inequality in China: An empirical analysis based on CHFS data," Journal of Asian Economics, Elsevier, vol. 91(C).
    2. Xu, Guangyu & Chen, Huang, 2025. "Inclusive growth dilemma: Weighing the pros and cons of land market reform," China Economic Review, Elsevier, vol. 91(C).
    3. Tiwari, Smriti, 2021. "Do macroeconomic fluctuations at destination matter in determining migrants’ return decisions?," World Development, Elsevier, vol. 148(C).
    4. Lin, Junjie, 2025. "Effects of electric vehicle demonstration and promotion policy on air pollution: Evidence from China," Transport Policy, Elsevier, vol. 162(C), pages 1-19.
    5. Ren, Guangcheng & Kong, Anni & Chen, Minjie, 2025. "The impact of land expropriation on household relative economic deprivation in rural China: The roles of livelihood strategies and heterogeneity," Economic Analysis and Policy, Elsevier, vol. 88(C), pages 1416-1432.
    6. Corrado Giulietti & Jackline Wahba & Klaus F. Zimmermann, 2013. "Entrepreneurship of the Left-Behind," Research in Labor Economics, in: Labor Market Issues in China, pages 65-92, Emerald Group Publishing Limited.
    7. Wang Li & Jie Weng, 2026. "Intensify or Alleviate? The Impact of Rural Digital Development on Rural Income Inequality: Evidence From the Chinese Household Level," Journal of International Development, John Wiley & Sons, Ltd., vol. 38(1), pages 71-87, January.
    8. Paolo Verme, 2011. "Two Classes of Generalized Deprivation Indexes," Economics Bulletin, AccessEcon, vol. 31(3), pages 2021-2029.
    9. Hausmann, Ricardo & Nedelkoska, Ljubica, 2018. "Welcome home in a crisis: Effects of return migration on the non-migrants' wages and employment," European Economic Review, Elsevier, vol. 101(C), pages 101-132.
    10. Han Jun & Jiang Shicheng, 2024. "Does the Adjustment of Industrial Structure Restrain the Income Gap between Urban and Rural Areas," Economics - The Open-Access, Open-Assessment Journal, De Gruyter, vol. 18(1), pages 1-15.
    11. Aurelian-Petruş PLOPEANU & Daniel HOMOCIANU, 2020. "Why would Romanian migrants from Western Europe return to their country of origin? Abstract: After conducting a survey among Romanian individuals left abroad, we analyze the particular influences relating to their intentions to return to their countr," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 11, pages 211-235, June.
    12. Chengyou Li & Zhouhao Sha & Tao Sun, 2023. "Rural Households’ Internet Use on Common Prosperity: Evidence from the Chinese Social Survey," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 170(3), pages 797-823, December.
    13. Mahé, Clothilde, 2016. "Skills and entrepreneurship: Are return migrants 'Jacks-of-all-trades'?," MERIT Working Papers 2016-071, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    14. Walter Bossert & Conchita D’Ambrosio, 2020. "Losing ground in the income hierarchy: relative deprivation revisited," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 18(1), pages 1-12, March.
    15. Elena Bárcena-Martín & Luis Imedio-Olmedo & Guillermina Martín-Reyes, 2007. "Inequality and deprivation within and between groups: An illustration of European union countries," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 5(3), pages 323-337, December.
    16. Amelie F. Constant, 2020. "Time-Space Dynamics of Return and Circular Migration: Theories and Evidence," CESifo Working Paper Series 8053, CESifo.
    17. Christian Dustmann & Joseph-Simon Görlach, 2016. "The Economics of Temporary Migrations," Journal of Economic Literature, American Economic Association, vol. 54(1), pages 98-136, March.
    18. Akinwumi Sharimakin, 2026. "Subjective well-being, relative deprivation and entrepreneurship development," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 16(1), pages 1-15, December.
    19. Biru Desta Kassaye & Yitbarek Takele Bayiley & Zerihun Kinde Alemu, 2025. "Returnee migrant entrepreneurship: a bibliometric analysis (1993–2024)," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 15(1), pages 1-23, December.
    20. Mingcong, Chen & Qingshan, Ma & Qiqi, Sun, 2025. "The impact of food safety regulation on the health of middle-aged and older adults: Evidence from Chinese food safety pilot cities," Economic Analysis and Policy, Elsevier, vol. 86(C), pages 1182-1197.

    More about this item

    Keywords

    ;
    ;
    ;

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:dur:durham:2025_03. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tatiana Damjanovic (email available below). General contact details of provider: https://edirc.repec.org/data/deduruk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.