The skill balancing act: when does broad expertise pay off?
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.
This study makes us of the OECD Structural Analysis industrial database (STAN) to investigate patterns of industry specialization as measured by the country's share of total industry production for 14 OECD countries over the period 1970 to 1993. I find that these industrialized countries tended to specialize manufacturing production in very different industries and most countries retained their specialization over the period from 1970 to 1993.