ENTREPRENEURSHIP AND PROVINCIAL SKILL DIVERSITY IN THAILAND
DOI:
https://doi.org/10.33736/ijbs.14351.2026Keywords:
skill diversity, entrepreneurship, workforce heterogeneity, Thailand, provincial analysisAbstract
This study investigates the relationship between provincial workforce skill diversity and entrepreneurship in Thailand using pooled cross-sectional data from the 2013 and 2022 Thai Labour Force Surveys, covering 77 provinces, with approximately 270,000 individual observations across the two waves; the regression sample after standard restrictions comprises around 175,000 observations. Provincial skill diversity is operationalised through four distinct indices measuring workforce heterogeneity: (1) educational attainment levels, (2) educational fields among highly educated workers, (3) occupational categories, and (4) industrial sectors. These indices are computed using fractionalisation index. The empirical strategy combines probit regressions to estimate the probability of entrepreneurship with instrumental variable (IV) techniques to address potential endogeneity. Furthermore, a generalised structural equation model (GSEM) was employed to examine indirect mechanisms through three mediators: entrepreneur skill diversity, employee skill diversity, and consumption diversity. The results show that provinces with greater skill diversity exhibit a significantly higher likelihood of entrepreneurship: a one-standard-deviation increase in skill diversity raises the probability of entrepreneurial activity by approximately 0.09-1.06 percentage points in 2013 and 0.003-0.50 percentage points in 2022. Indirect effects operate mainly through entrepreneur skill diversity, consistent with knowledge spillover theory. Conversely, employee skill diversity reduces entrepreneurial activity, while lower consumption diversity is positively associated with entrepreneurship through a necessity-driven channel, both patterns reflecting the informal and survival-oriented nature of Thailand's labour market. Policy implications emphasise inclusive education, balanced regional industrial strategies, and labour mobility to leverage workforce diversity for sustainable, innovation-driven entrepreneurship.
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