Open Access Journal Article

The reasons that younger homeowners are less likely to become entrepreneurs: The role of capital constraints

by Mingzhi Hu a,*  and  Xiaoshuang Li b
a
School of Management, Zhejiang University of Technology, Hangzhou, China
b
Institute of Industrial Internet and Internet of Things, China Academy of Information and Communications Technology, Wuhan, China
*
Author to whom correspondence should be addressed.
JRE  2022 1(1):5; https://doi.org/10.58567/jre01010005
Received: 13 November 2022 / Accepted: 21 December 2022 / Published Online: 29 December 2022
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Abstract

Considering that housing is the single biggest asset for most households, owning a home may create barriers to entrepreneurship for young people who generally accumulate relatively little wealth due to a short-term career and low income. Using longitudinal data from the China Family Panel Studies (CFPS) survey, our empirical work suggests that homeowners are associated with significantly less propensity for entrepreneurial engagement and the negative homeownership effect on entrepreneurship is much larger for younger homeowners. These findings are robust to omitted variable bias, reverse causality and model misspecification. We explore the mechanism through which capital constraints related to housing purchase may more affect younger homeowners from starting entrepreneurial activities. We find strong supportive evidence for this mechanism.

Keywords: Homeownership; Age; Entrepreneurship; Capital constraint;
Copyright: © 2022 by Hu and Li. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) (Creative Commons Attribution 4.0 International License). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

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ACS Style
Hu, M.; Li, X. The reasons that younger homeowners are less likely to become entrepreneurs: The role of capital constraints. Journal of Regional Economics, 2022, 1, 5. https://doi.org/10.58567/jre01010005
AMA Style
Hu M, Li X. The reasons that younger homeowners are less likely to become entrepreneurs: The role of capital constraints. Journal of Regional Economics; 2022, 1(1):5. https://doi.org/10.58567/jre01010005
Chicago/Turabian Style
Hu, Mingzhi; Li, Xiaoshuang 2022. "The reasons that younger homeowners are less likely to become entrepreneurs: The role of capital constraints" Journal of Regional Economics 1, no.1:5. https://doi.org/10.58567/jre01010005
APA style
Hu, M., & Li, X. (2022). The reasons that younger homeowners are less likely to become entrepreneurs: The role of capital constraints. Journal of Regional Economics, 1(1), 5. https://doi.org/10.58567/jre01010005

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