Self-Relatedness or Cross-Relatedness: The Co-Evolution of Industries and Occupations Among Chinese Cities

Existing research on regional diversification primarily focuses on relatedness within industries or occupations, whilst neglecting the cross-effects between the two. This study first formalizes the concepts of self- and cross-relatedness and then establishes a two-layer network framework to approach the interaction between industries and occupations. Then, based on China's export and occupation data, both occupation and industry are incorporated as the endogenous factors in explaining regional diversification among 264 prefectural-level cities in China. The empirical evidence suggests that both self- and cross-relatedness are significantly associated with new regional specializations in the co-evolution of industries and occupations. More importantly, the roles of self-relatedness are more significant in small-sized cities, while the association between cross-relatedness and industry-occupation co-evolution is more prominent in large cities.