Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/245637 
Year of Publication: 
2021
Series/Report no.: 
IZA Discussion Papers No. 14586
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
We use the 2012-2018 China Family Panel Studies data to examine the relationship between household energy poverty and an individual’s probability of becoming an entrepreneur. Consistent with the theory of underdog entrepreneurship that negative personal circumstances can foster self-reliance, resourcefulness and other skills and personality traits conducive to entrepreneurship, we find that spending a higher share of household income on energy consumption or being energy poor increases the probability of being an entrepreneur. The results are robust to various checks, including alternative measures of energy poverty, non-linear effects of the share of energy spending in household income, past entrepreneurial experience, alternative estimation methods and potential omitted variable bias. We also explore the channels through which energy poverty influences whether one chooses to become an entrepreneur. We find that cognitive functions, mental health and self-confidence negatively mediate, while self-belief, extroversion and openness positively mediate, the relationship between energy poverty and entrepreneurship.
Subjects: 
entrepreneurship
energy poverty
China
JEL: 
I32
L26
Q41
Document Type: 
Working Paper

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