The security unlock: How rural social pension makes people more entrepreneurial?

Previous literature on the determinants of entrepreneurship has not explored the role of social pension. Leveraging variation in the roll-out timing of a universal rural pension program across Chinese counties, our analysis, at both the individual and aggregate levels, reveals that pension provision led to an increase in entrepreneurship among the younger generation. We show that this effect operates through two primary channels: an intergenerational transfer channel and a local demand channel. Specifically, the pension program mitigates upward transfers from adult children to elderly parents, while boosting local consumer demand, which exerts a demand-side “pull” effect on enterprise establishment. Our findings may shed new light on the interplay between pension, intergenerational resource allocation, and entrepreneurial activity.