Influence Of Agglomeration Economy On Entrepreneurship In Chinese Cities And Mechanism

Since the reform and opening up,the rapid development of China's economy is inseparable from the active economic activities of entrepreneurs.Entrepreneurship is an important driving force for promoting regional economic growth and innovation.Entrepreneurship is an important driving force for regional economic growth and innovation.Under the circumstance that China's economic development has entered a New Normal,the pressure on the urban economic development of China is growing,and the demand for entrepreneurship is becoming more and more urgent."Mass Entrepreneurship and Innovation " is becoming an important national policy.However,one fact that cannot be ignored is that under the trend of the overall entrepreneurial level in China,differences of entrepreneurial spirit and entrepreneurial activities among geographical areas are still very obvious,so that it is hard to form a big pattern of comprehensive entrepreneurship.In essence,city is a place where companies and labour are highly concentrated.The spatial proximity of enterprises and labour creates agglomeration economy.Therefore,the urban agglomeration economy is undoubtedly an important entry point to explain the generation and development of entrepreneurial activities.How to rationally lay out the city size to prosper China's entrepreneurial spirit becomes an issue with important policy implications.Due to the rapid economic growth in recent years in China,scholars' research has begun to focus on the agglomeration economy.It is worth noting that most scholars are still limited to exploring the impact of the agglomeration economy on the type of agglomeration economy,lacking attention to the degree of agglomeration economy.Therefore,this study attempts to explore the direction and related mechanisms that influence entrepreneurship from the perspective of agglomeration economics.Based on the research and summarization of domestic and foreign entrepreneurship and agglomeration economies,using the 2014 CLDS survey and matching cross-sectional data of 2010 prefecture-level cities in China,through Probit model,instrumental variable regression,quantile regression,and interactive term regression.This study explores the impact of agglomeration economies measured by the resident population size and density on entrepreneurial activities in China to provide an evidence of the negative externalities of the agglomeration economy,sourcing from developing countries at the stage of high-speed urbanization.The measurement results based on the Probit model show that the higher the degree of agglomeration economy is,the less active the entrepreneurship of necessity entrepreneurs in China will be,but this conclusion has no significant impact on opportunity entrepreneurs.Quantile regression analysis shows that the entrepreneurial activity areas at different levels were generally damaged from the increase of city size,and the suppression of city size for areas with high entrepreneurship was more prominent.In order to alleviate the possible reverse causal endogeneity between the agglomeration economy and entrepreneurship,this study uses resident population size from the first census data of China in 1953 as an instrumental variable.The two-stage regression results show that the impact of agglomeration economics on entrepreneurship is no longer significant.The possible reason is that positive and negative effects of agglomeration economies affecting entrepreneurial activities cancel each other out.Considering the heterogeneity of the influence of the agglomeration economy on the probability of individual entrepreneurship,we use the interactive term regression to test the adjustment effect to compensate for the gap revealed by the mechanism.The results show that individuals with higher social capital can effectively alleviate the adverse effects of the agglomeration economy on individual entrepreneurship;while high housing prices,firm density and large firm proportions strengthen the competitive effect of the agglomeration economy and weaken the probability of individual entrepreneurship;the household registration system and human capital have weak adjustment effects.To a certain extent,urban households help to alleviate the negative effect of the agglomeration economy on individual entrepreneurship,while human capital further strengthens the negative effect of the agglomeration economy on individual entrepreneurship.The policy enlightenment is that,under the circumstance of new urbanization,the government should pay attention to negative factors that are not conducive to individual entrepreneurship,and at the same time strengthen positive factors that contribute to the prosperity of entrepreneurship.Specifically,the government should improve its services for entrepreneurship,provide policy support for potential small and medium-sized enterprises,and optimize the ecological environment of entrepreneurship,handle the relationship between household registration restrictions and urban development properly and effectively,and apply the policy tilts towards the western region appropriately,to avoid the phenomenon that entrepreneurs flow from the west to the central and eastern regions again;examine the direction of existing education and carry out entrepreneurship education rationally.