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Abstract This study offers new empirical evidence on the connection between international trade and domestic entrepreneurial activities. Exploiting the tariff variation across industries and time during the recent US–China trade… Click to show full abstract
Abstract This study offers new empirical evidence on the connection between international trade and domestic entrepreneurial activities. Exploiting the tariff variation across industries and time during the recent US–China trade war, we find that the US import tariff increases are associated with relative reductions in Chinese new firm entry rates. The negative impact is more pronounced among industries that are dependent on US exports and with a higher irreversible investment ratio. Heterogeneity across regions with varying institutional quality is also identified. Robustness tests are provided.
Journal Title: Economics Letters
Year Published: 2021
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