Working Paper: NBER ID: w20506
Authors: James Liang; Hui Wang; Edward P. Lazear
Abstract: Entrepreneurship requires energy and creativity as well as business acumen. Some factors that contribute to entrepreneurship may decline with age, but business skills increase with experience in high level positions. Having too many older workers in society slows entrepreneurship. Older workers do not possess the advantages of youth, but more significant is that when older workers occupy key positions they may block younger workers from acquiring business skills. A formal theoretical structure is presented and tested using the Global Entrepreneurship Monitor data. The results imply that a one-standard deviation decrease in the median age of a country increases the rate of new business formation by 2.5 percentage points, which is about forty percent of the mean rate. Furthermore, older societies have lower rates of entrepreneurship at every age.
Keywords: entrepreneurship; demographics; age structure
JEL Codes: J11; L26; M51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Decrease in median age (J11) | Increase in rates of new business formation (L26) |
| Older age structures (J11) | Decrease in entrepreneurship (L26) |
| Older age structures inhibit younger workers (J21) | Reduce entrepreneurship (L26) |
| Age structure of workforce (J21) | Determinant of entrepreneurship (L26) |