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This paper provides new evidence on the impact of private property rights on entrepreneurship. I explore this issue in the context of a housing reform in urban China that allowed state employees living in state-owned rental units the opportunity to buy their homes at subsidized prices. Using the reform as an exogenous change in the capital constraints and mobility costs that inﬂuence individuals’ entry into entrepreneurship, my estimates suggest that the property reform increased self-employment. I develop a model of job choice to test two mechanisms that might explain how the reform increased entrepreneurship. I ﬁnd that the reform increased the ability of individuals to ﬁnance entrepreneurial ventures by allowing them to capitalize on the value of the real estate. The unbundling of housing beneﬁts from state employment also contributed to the increase in entrepreneurship by facilitating labor mobility out of the state sector.
UC Berkeley on May 6-7, 2011 Link to Book