Lucas (1978) predicts that a higher educated population will lead to have lower numbers of earlystage entrepreneurs and established firms in a country. This is empirically confirmed by Van Praag and Van Stel (2013) and Millán et al. (2014). However, the Lucas analysis is static and does not capture the dynamic process of entrepreneurs’ engagement in various stages of venture creation (i.e., nascent, early-stage, establishment). Our paper aims to look at this process and examine how the quality of labor market at the country-level affects entrepreneurial decisions of individuals. On the entrepreneurship supply side, we expect that labor market with higher quality at the country level may supply more entrepreneurs that possess the right cognitive skills and learning capabilities, thereby allowing them to discover and exploit entrepreneurial opportunities (Audretsch & Thurik, 2004). On the entrepreneurship demand side, qualified individuals may increase the demand for customized new products and services as consumers (Millan et al., 2014). This creates new business opportunities and demand for entrepreneurs in a society. Hence, labor market with high quality will stimulate knowledgeable individuals to start businesses, predominantly in the form of opportunity- driven entrepreneurship.