Abstract
This analysis examines how a local skills gap is related to entrepreneurial outcomes at the regional level in the USA. We develop a novel measure of a regional skills gap using education, comparing the educational attainment of the population with the education requirements of jobs in the region. We hypothesize that an educational mismatch, specifically overeducation, drives new establishment births. This positive effect of overeducation is even higher in high-amenity, non-metro counties, mainly in the Mountain West. To the extent that entrepreneurship generates broader economic growth, this suggests an especially promising strategy for development in some rural regions.
Plain English SummaryOvereducated communities rich in natural resources are primed for entrepreneurship. By measuring a skills gaps based on the match between the education level of the local population and the education required by employers, we quantify the extent of educational mismatch across US counties. We find that overeducated places (more people with a bachelor's degree than would be predicted by the existing employers) are more entrepreneurial, especially if they are rich in natural amenities and rural. Our results imply the importance of place-based economic policy, highlighting how local context matters and may ultimately determine the success of any given strategy.