Propensity for self-employment and success increase with ability balance

All About Balance? A Test of the Jack-of-all-Trades Theory Using Military Enlistment Data. Lina Aldén, Mats Hammarstedt, and Emma Neuman. Labour Economics. https://doi.org/10.1016/j.labeco.2017.09.001

Highlights
•    We test the Jack-of-all-trades theory using Swedish military enlistment data
•    Ability balance is measured based on tests of cognitive and non-cognitive ability
•    The unique data addresses the issue of endogeneity in skill balance
•    We find that both propensity for self-employment and success increase with ability balance
•    Policies for skill-building in many areas should encourage self-employment

Abstract: According to the Jack-of-all-trades theory, people with a balanced set of skills are more suitable for self-employment than are those without. In this paper we test this theory using Swedish Military Enlistment data. This data enables us to construct a measure of balance in abilities that, in comparison to measures used in previous research, is less contaminated by endogeneity problems. We find clear support for the Jack-of-all-trades theory, in the sense that the likelihood of being self-employed is higher for individuals whose skills are balanced. In addition, their earnings from self-employment tend to be higher.

Keywords: Ability balance; Cognitive and non-cognitive ability; Earnings; Jack-of-all-trades theory; Occupational choice; Self-employment

JEL-classification: J24; J31; L26