Journal of Development Economics · 2027 · Wenchao Li、Yifan Lin、Junjian Yi、Haochen Zhang
Abstract
China’s rapid growth alongside extensive state ownership challenges theories of state-sector inefficiency. This paper identifies a novel micro-level channel: “dual-track in the family,” whereby one spouse’s stable state job enables the other to pursue private entrepreneurship. Using a triple-difference design that exploits the 1993 market reform, we find that spouses of state employees were 9.8 percentage points more likely to become entrepreneurs after the reform. Mechanism evidence suggests that spousal state employment may promote entrepreneurship by insuring the family against risk. The findings reveal how a gradualist, dual-track transition can succeed partly by leveraging state-sector stability to underpin private-sector dynamism.