Doing Business in China: Parental Background and Government Intervention Determine Who Owns Businesses
While intergenerational transmission of entrepreneurship is a well-known regularity, we hypothesize that in a transition economy where the state retains an important role, those whose parents are government workers may also be more likely to become business owners. We test the hypothesis in China and show that (1) on average, both entrepreneurs and government workers have a higher likelihood of having children who own incorporated businesses and (2) In provinces where government involvement is higher, the likelihood that children of government workers (entrepreneurs) own incorporated businesses is significantly higher (lower). Our study demonstrates that the local economic business environment shapes the influence of parental background on business ownership.
We are grateful to seminar participants at Brown University, MIT Sloan, the World Bank, the CfPE conference at UBC and the TED conference at Fudan University. We thank Shuo Chen and Zhikuo Liu for sharing some data. Padr� i Miquel gratefully acknowledges financial support from The Whitney and Betty MacMillan Centre of International and Area Studies. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.