Does Cultural Diversity Help or Hinder Entrepreneurs? Evidence from Eastern Europe and Central Asia

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Using the 2010 Life in Transition Survey, this paper studies the association between local religious diversity and individual entrepreneurial behavior in 29 transition countries. We find that localities with higher religious diversity have more respondents who have tried to set up a business. Although religious diversity also correlates with a higher start-up probability (following trial), this effect is driven by higher access to finance. We also provide suggestive evidence that the positive association between local religious diversity and entrepreneurial trial is positively moderated by social capital (when measured as access to weak ties and the ability to bridge structural holes).