To the individual entrepreneur, the optimal allocation of entrepreneurship is the source of wealth. For the development of economy of a country, the role of institutions in determining whether entrepreneurs will channel their efforts toward productive activities or toward unproductive activities is crucial. Based on empirical study, this paper founded that the construction of reward and taxation could alter the allocation. And the unproductive entrepreneurship is 4 times to productive entrepreneurship. The warning of this paper is that institution in China has cause over allocation of entrepreneurship into unproductive activities.