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

Liu Cui (), Yit Wey Liew () and Muhammad Habiburl Rahman ()
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Liu Cui: Zhejiang University
Yit Wey Liew: Sunway University
Muhammad Habiburl Rahman: Durham University

No 2025_03, Department of Economics Working Papers from Durham University, Department of Economics

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

Keywords: Labor migration; Economic development; Inequality (search for similar items in EconPapers)
JEL-codes: D63 J61 L26 O15 (search for similar items in EconPapers)
Date: 2025-09
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