Does migrant working experience stimulate returnees’ entrepreneurship: Evidence from rural China

Abstract

With an informative dataset describing Chinese rural households from 2003 to 2015, this paper examines the impact of internal rural-to-urban migration for work on the entrepreneurial decisions of returnees. Return migrants are found to be more likely to become transformational rather than subsistence entrepreneurs. To finance their entrepreneurial activities, returnees are more inclined to borrow money in formal credit markets and use their own saving deposits than are those without migrant working experience. Evidence is also presented showing that family connections with a formal civil servant reduce the probability of a returnee's undertaking transformational entrepreneurship, though the connections with a grassroots cadre in the village committee play a positive role. Moreover, the exposure to the New Cooperative Medical Scheme has few effects on households’ entrepreneurship, while the involvement in the New Rural Pension Scheme encourages transformational entrepreneurship.