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Migrant Entrepreneurs and Credit Constraints under Labour Market Discrimination

Author

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  • Frijters, Paul

    (London School of Economics)

  • Kong, Tao Sherry

    (Peking University)

  • Meng, Xin

    (Australian National University)

Abstract

We use a unique data of representative migrants and urban local workers in 15 Chinese cities to investigate entrepreneurship and credit constraints under labour market discrimination. We divide self employed into prefer to be self-employed and prefer to have a salaried job but cannot find one; and divide salaried workers into want-to-be entrepreneurs and happy-to-be salaried workers. Over 40 percent of migrant workers are either currently or want-to-be entrepreneurs. Both groups are very similar in terms of risk taking preferences and network size. Want-to-be entrepreneurs however suffer from credit constraints identified by negative financial shocks in the year before. Our back-of-envelope calculation reveals that overcoming the current level of credit constraints may be worth 2% of GDP per year direct earnings increases.

Suggested Citation

  • Frijters, Paul & Kong, Tao Sherry & Meng, Xin, 2011. "Migrant Entrepreneurs and Credit Constraints under Labour Market Discrimination," IZA Discussion Papers 5967, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp5967
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Chen, Xiaofen, 2018. "Why do migrant households consume so little?," China Economic Review, Elsevier, vol. 49(C), pages 197-209.
    2. L Rachel Ngai & Christopher A Pissarides & Jin Wang, 2019. "China’s Mobility Barriers and Employment Allocations," Journal of the European Economic Association, European Economic Association, vol. 17(5), pages 1617-1653.
    3. Naudé, Wim & Siegel, Melissa & Marchand, Katrin, 2015. "Migration, Entrepreneurship and Development: A Critical Review," IZA Discussion Papers 9284, Institute of Labor Economics (IZA).
    4. Mehtap Akgüç & Corrado Giulietti & Klaus Zimmermann, 2014. "The RUMiC longitudinal survey: fostering research on labor markets in China," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-14, December.
    5. Marcus H. Böhme & Sarah Kups, 2017. "The economic effects of labour immigration in developing countries: A literature review," OECD Development Centre Working Papers 335, OECD Publishing.
    6. Yuanyuan Chen & Zichen Deng, 2019. "Liquidity Constraint Shock, Job Search and Post Match Quality—Evidence from Rural-to-Urban Migrants in China," Journal of Labor Research, Springer, vol. 40(3), pages 332-355, September.
    7. Akgüç, Mehtap & Liu, Xingfei & Tani, Massimiliano & Zimmermann, Klaus F., 2016. "Risk attitudes and migration," China Economic Review, Elsevier, vol. 37(C), pages 166-176.
    8. Wim Naudé & Melissa Siegel & Katrin Marchand, 2017. "Migration, entrepreneurship and development: critical questions," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 6(1), pages 1-16, December.
    9. Christian Dustmann & Francesco Fasani & Xin Meng & Luigi Minale, 2015. "Risk Attitudes and Household Migration Decisions," CReAM Discussion Paper Series 1514, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
    10. Yin, Zhichao & Gong, Xue & Guo, Peiyao & Wu, Tao, 2019. "What Drives Entrepreneurship in Digital Economy? Evidence from China," Economic Modelling, Elsevier, vol. 82(C), pages 66-73.
    11. Xu, Hao, 2017. "The time use pattern and labour supply of the left behind spouse and children in rural China," China Economic Review, Elsevier, vol. 46(S), pages 77-101.
    12. Li Yu & Xundong Yin & Xiang Zheng & Wenwei Li, 2017. "Lose to win: entrepreneurship of returned migrants in China," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 58(2), pages 341-374, March.

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    More about this item

    Keywords

    entrepreneurs; credit constraints; migration; China;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J70 - Labor and Demographic Economics - - Labor Discrimination - - - General

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