Is the Occupational Evolution of Chinese Cities Driven by Industrial Structures? Insights From Industry‐Occupation Cross‐Relatedness

ABSTRACT While prior research has emphasized the path‐dependent nature of occupational systems, it has paid limited attention to how local industrial structures contribute to occupational change. To address this gap, this study examines how regional occupational evolution is shaped by two distinct mechanisms: (1) path‐dependent skill and knowledge transfer, whereby new occupations emerge through the recombination of existing occupational structures; and (2) industry‐driven task reconfiguration, through which industrial upgrading reshapes the demand for occupations. To operationalize these dynamics, the concept of industry–occupation cross‐relatedness is introduced, capturing the proximity between new occupations and a region's existing industrial portfolio. Drawing on panel data from 241 Chinese cities between 2000 and 2015, the study estimates the effects of both occupational relatedness and cross‐relatedness on new occupation specialization. The results reveal that both mechanisms significantly promote occupational evolution, yet they tend to function as substitutes rather than complements. Furthermore, their effects differ across skill levels: high‐skilled occupations are more responsive to industrial transformation, low‐skilled occupations to occupational pathways, while medium‐skilled occupations exhibit relatively weak responsiveness to both. These findings underscore the importance of structural conditions and skill heterogeneity in shaping regional patterns of occupational change.