Is pension insurance a barrier to entrepreneurship? New evidence from China

Abstract

This article provides evidence of the impact of pension insurance on entrepreneurship. It uses recent, nationally representative sample data from the Chinese General Social Survey (2013). We use a probit regression model to investigate whether the pension insurance converge rate affects the probability of a person becoming an entrepreneur. We find that the presence of both basic pension and business pension insurance reduce individual entrepreneurial probability. We also find that the two types of pension insurance do not appear to increase entrepreneurship among any particular subgroup, based on geo graphical regions, gender, education, social connection or marital status. Moreover, we argue that the basic pension and business pension insurance actually have a negative effect on the probability of small business entrepreneurship. Even, we have found there seems to be one important exception to this general pattern. For, most importantly, basic pension and business pension insurance have a positive effect on the probability of one particular kind of entrepreneurship: Innovation-driven entrepreneurship. Exploring possible mechanisms, we find that the important transmission channels through which pension insurance affects business creation is the lack of security and total family income.