Empirical Research On The Effects Of Chinese City-level Education On Entrepreneurship

Based on the close relationship between urban development and entrepreneurship,this paper studies the effects that city-level education has on entrepreneurship using the samples of urban residents in 1% of 2005 national population census.We find the negative influence of individual education and city-level education on entrepreneurship.The negative influence may come from the substitute effects between employees and entrepreneurs.The results illustrate that in the cities with higher education level,interviewees are more willing to be employees in state-owned enterprises and startups are replaced by employees in state-owned enterprises.Also we can't conclude that city-level education will benefit the startups in the group of larger cities.Considering the endogeneity of city-level education,we use the instrumental variable,the net number of departments moved in during the university relocation movement in the 1950 s,to mitigate the estimation bias.The IV Probit estimation still presents the negative relation between city-level education and entrepreneurship.Furthermore,by dividing the group into manufacturing sectors and service sectors,we can find that the negative effects of city-level education on entrepreneurship are much stronger in tertiary industry.This is mainly due to the greater influence of state-owned monopolies on service sectors.Besides,the heterogeneity analysis shows that migrants,female and less-experienced urban residents are more likely to be entrepreneurs in order to reduce the discrimination in the urban labor market comparing to local,male and experienced urban residents.However,these three comparatively disadvantaged groups can't improve their educational returns through business starting.Overall,human capital accumulation in urban areas has not fully prepared for entrepreneurship in China.The education pattern in China needs enhancing and the society offers more support for entrepreneurship as well.