The Impact of Household Real Estate and Self-employment: Evidence from China

Abstract This study examines the influence of household real estate on self-employment probability using a probit model based on four-phase Chinese General Social Survey microsurvey data. Our baseline results show that household real estate substantially increases the probability of personal self-employment. To solve endogeneity, we consider the Chinese marriage tradition in which parents who have male offspring prepare more real estate for their children. Using child gender ratio as an instrumental variable of household real estate, we find that real estate has a significant positive effect on self-employment. Moreover, real estate enhances a family’s risk-sharing ability, thus increasing the probability of individual self-employment. Household real estate helps enhance an individual’s social capital, thereby promoting self-employment. However, household real estate also promotes other personal investment, such as stocks, funds, and other assets, forming a crowd-out effect on self-employment.