Entrepreneurs, Jacks of all trades or Hobos?

Lazear (2005) suggests that entrepreneurs should be generalists, while those who work for others should be specialists. Many prospective entrepreneurs will develop varied skills by engaging in a variety of employment activities prior to becoming an entrepreneur, and incomes are higher for those that do so. An alternative view predicts that those with greater taste for variety are more likely to become entrepreneurs. Varied employment prior to becoming an entrepreneur is simply an expression of this taste, and is associated with lower earnings. Data from a survey of 830 independent inventors and 300 individuals from the general population are used to discriminate between these two theories. The results show that inventor-entrepreneurs typically have a more varied labor market experience, and that varied work experience is associated with lower household income.

Research highlights▶ Lazear (2005) says entrepreneurs should be generalists, while employed should be specialists. ▶ Incomes are higher for generalist entrepreneurs. ▶ Alternatively, those with greater taste for variety are more likely to become entrepreneurs. Incomes are lower for generalist entrepreneurs. ▶ Data shows entrepreneurs have more varied labor market experience. ▶ But more varied work experience is associated with lower household income.