Housing Market and Entrepreneurship: Micro Evidence from China

Bing Han, Lu Han and Zhengyi Zhou

MPRA Paper from University Library of Munich, Germany

Abstract: Using a unique survey data of Chinese households, we study the impact of house price growth and house price risk on entrepreneurship. House price risk, measured as the sensitivity of house price growth to local GDP growth, negatively impacts the entrepreneurship of homeowners relative to renters. This finding is concentrated only among sophisticated households and is consistent with the portfolio effect when housing and occupational choices are integral parts of the household portfolio. Moreover, a high past house price growth reduces the entrepreneurship of homeowners relative to renters. This holds for both sophisticated and unsophisticated households. We propose a new economic channel based on extrapolative belief and provide further supportive evidence.

Keywords: Entrepreneurship; Housing market; Extrapolative belief (search for similar items in EconPapers)
JEL-codes: D10 G11 L26 R21 R31 (search for similar items in EconPapers)
Date: 2020-06-06, Revised 2020-08-17
New Economics Papers: this item is included in nep-cna, nep-ent, nep-tra and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:102597

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