Impact of city size on self-employment behavior: Evidence from Chinese migrants

Abstract

Self-employment is an important approach for migrants to gain a foothold in cities and improve their economic and social welfare. This study investigates the relationship between city size and migrants’ self-employment behavior using data from the 2011–2018 CMDS and macro-statistical sources. We find that in the Chinese context, larger cities correlate with an increased likelihood of migrants engaging in self-employment. These results persist under various methodological checks, including alternative estimation methods, sample screening techniques, and addressing concerns about endogeneity. Market potential and diversified agglomeration emerge as important channels through which larger cities encourage migrants’ decisions to pursue self-employment. Moreover, the positive impact of larger cities is more pronounced among rural-to-urban migrants and own-account workers compared to urban-to-urban migrants and employers. This paper provides insights into high-quality development and migrant management strategies in large cities in China.