The Impact of Economic Slowdown on Entrepreneurship

Entrepreneurs and entrepreneurship play an important role in the economy. Based on the data from the China Family Panel Studies (CFPS) between 2010 and 2018, this paper investigates the impact of economic slowdown on entrepreneurship. By employing export growth as an instrumental variable to alleviate endogeneity, the estimation results show that economic slowdown has significantly stimulated entrepreneurship. It is found that the decline in family wage income and the increase in employment willingness are two possible channels. Further research shows that the impact of economic slowdown on entrepreneurship is heterogeneous. Men, rural residents, young people, low education, married, child-bearing and groups with working background in enterprises funded by foreign investors and investors from Hong Kong、Macao and Taiwan are more strongly stimulated. Meanwhile, what has been improved significantly is the “necessity” type of entrepreneurship. This paper provides evidence for the importance to put forward the strategy of “mass entrepreneurship and innovation”, and give policy implications for taking pratical and effective measures to protect and stimulate entrepreneurship.