We study the impact of State-owned enterprises (SOEs) on the quality of entrepreneurship in China. Using long series of firm registration and performance data, we document that the massive SOE downsizing in the late 1990s significantly improved the quality of entrepreneurship. Compared with entrepreneurs in other time periods, firms founded by the reluctant entrepreneurs induced by the SOE layoffs have better performances. To explain these results, we present a simple model of occupational choices where high-skilled individuals obtain a higher value than low-skilled individuals from the benefits offered by SOE jobs, leading them to select into the SOE sector in the pre SOE reform era. When the SOE sector was downsized, some high-skilled SOE employees were reluctantly unleashed into entrepreneurship. We also provide corroborating evidence for other implications of the model.
张亚佩
Yapei Zhang is an assistant professor of Finance at ShanghaiTech University, School of Entrepreneurship and Management. Her research focuses on the fields of household finance, entrepreneurial finance, and asset management. Her papers are accepted for publication in journals such as the Journal of Finance and Critical Finance Review. She received her Ph.D. in Finance from HEC Paris and a Master's degree from Ecole Polytechnique (l’X).
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