Overeducation, natural amenities, and entrepreneurship

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.