Early-life exposure to hardship increased risk tolerance and entrepreneurship in adulthood with gender differences

Abstract

Significance We investigate the effect of hardship on entrepreneurship using China’s Great Famine as a quasinatural experiment. This yielded robust evidence that individuals who experienced more hardship were subsequently more likely to become entrepreneurs. Importantly, the increase in entrepreneurship was at least partly due to conditioning rather than selection. Regarding the behavioral mechanism, hardship was associated with greater risk tolerance among men and women but conditioned business ownership only among men. The gender differences were possibly due to a Chinese social norm that men focus on market work and women focus on domestic work combined with interspousal risk pooling in occupational choice.