British regions are becoming increasingly culturally diverse, with migration as the main driver. Does this diversity benefit local economies? This research examines the impact of cultural diversity on the entrepreneurial performance of UK regions. We focus on two largely overlooked factors: the measurement of diversity and the skills composition of diverse populations. First, more than demonstrating the importance of cultural diversity for entrepreneurship, we show that the type of cultural diversity measured is a decisive factor. Second, the skill composition of diverse populations is also key. Diversity amongst highly skilled workers exerts the strongest impact upon start-up intensities. The empirical investigation employs spatial regression techniques and carries out several robustness checks, including instrumental variables specifications, to corroborate our findings.
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