Does family involvement increase the subjective well-being of the self-employed? Evidence from China

Using data from the China Household Finance Survey, we investigate the relationship between family involvement and the subjective well-being (SWB) of the self-employed. Instrumental variables are used to address the potential endogeneity of family involvement. We show that family involvement has a significant effect on SWB and that the effect varies depending on whether the self-employed hire employees. When there are no employees, the effect is significantly positive; when employees are present, the effect is significantly negative. Specifically, self-employed individuals who have family involvement but no employees significantly have the higher levels of SWB than all the other self-employed individuals. Mechanism analysis shows that family involvement affects the SWB of the self-employed through an increase in business income. Robustness checks, including an extended ordered probit regression model and an estimation using an alternative measure of family involvement, validate our findings. Our analysis implies that family labour is an effective source of human resources for self-employed individuals in China, especially those without employees.