When both management skills and labor skills differ in the population, the nature of firm formation can differ radically from the equilibrium we are used to dealing with: The best potential managers could end up as wage workers. This happens when managerial skills are positively correlated with working skills, and there is some empirical evidence that this is indeed the case.
ASJC Scopus subject areas
- General Business, Management and Accounting
- Economics and Econometrics