Unlocking entrepreneurial growth: migrants and new firm entry in China

Using administrative data on firm registrations in China from 2000 to 2005 and employing a shift-share design, this study estimates the causal impact of rural-urban migration on new firm entry. Our findings show that the influx of migrants significantly increases new firm creation by reducing wages for low- skilled labour, thereby lowering labour costs for firms. This effect is especially pronounced in industries characterized by lower patent intensity, lower skill requirements, and higher labour intensity. The study underscores the vital role of labour mobility in driving entrepreneurial growth.