The skill balancing act: when does broad expertise pay off?
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We compare skill sets of employees working in businesses of different size to the skill sets of entrepreneurs. Employees in large businesses tend to have a lower skill balance than those working in small businesses; yet, the skill balance of entrepreneurs remains the largest. Our evidence suggests that the skill level and skill scope matter for balance and increase with formal education levels but decrease with the number of previous occupations. We find a positive relationship between skill balance and income that is strongest for entrepreneurs. For employees, the relationship remains positive but the magnitude of the association decreases when business size increases.
KeywordsEntrepreneurship Balanced skills Firm size Division of labor
JEL classificationsL22 L26 J24 J31 M13
We are grateful to Michael Fritsch, Ljubica Nedelkoska, Michael Wyrwich, and two anonymous referees for providing us with helpful comments.
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