Urban housing demolition and entrepreneurship in China

Xinheng Li () and Tao Fu ()
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Xinheng Li: Zhejiang University
Tao Fu: Zhejiang University

Empirical Economics, 2025, vol. 69, issue 2, No 11, 914 pages

Abstract: 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.

Keywords: Urban housing demolition; Entrepreneurship; Household wealth; CHFS (search for similar items in EconPapers)
JEL-codes: L26 O18 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s00181-025-02751-y

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