Migration barrier relaxation and entrepreneurship: Evidence from the hukou reform in China
利用中国2014年全国户籍改革和行政企业注册数据，研究发现改革县相比控制县创业活动显著增加，新企业规模小、存活率低且集中在劳动密集型行业，表明劳动力供给增加是机制之一。
We study the impact of relaxing internal migration barriers on entrepreneurship by exploiting China’s 2014 nationwide hukou reform and the administrative firm registry. Our difference-in-differences estimation finds that reformed counties experience sizable increases in entrepreneurial activities compared to control counties. The reform induces the creation of firms with a smaller scale and a lower likelihood of survival, indicating moderate expansions in labor demand. Migrant workers’ wages decline and entrepreneurial activities improve most in labor-intensive industries, implying that increased labor supply serves as one underlying mechanism. Our findings highlight the important role that removing domestic labor market frictions plays in promoting entrepreneurship. • This paper studies the impact of internal migration on entrepreneurship. • We exploit variation from China’s recent nationwide migration barrier relaxation. • The reform leads to sizable increases in firm entry in treated counties. • New firms are small, have a low survival rate, and are in labor-intensive industries. • Removing domestic labor friction promotes entrepreneurship in the developing world.