Skill diversity of cities and entrepreneurship

This paper analyses the effect of city skill diversity on local entrepreneurship. It proposes a mechanism-based framework to study the precise channels through which skill diversity contributes to local entrepreneurship. Using a newly released national household survey in 125 Chinese cities, it finds a significant and robust positive relationship between skill diversity and entrepreneurship. Further heterogeneity analysis shows that the skill diversity of cities matters for entrepreneurship in both the manufacturing and services sectors. The paper highlights the role of skill complementarities at the city level for entrepreneurship.