Fewer entrepreneurs among ageing populations

2006

Countries where ageing populations are increasing faster than younger people may also see a decline in entrepreneurial business activity according to research from Babson College Professor Maria Minniti, Research Director of The Global Entrepreneurship Monitor.

Their research entitled, The Effect of Aging on Entrepreneurial Behavior, was published in the Journal of Business Venturing 2006.

Minniti and colleague Moren Levesque from the University of Waterloo, Canada, found that individuals select career paths according to the interplay of age, risk, and wealth.

Older workers in traditional employment have less incentive to start a new business because their current income is likely to increase over time with experience and seniority. In contrast, younger workers have fewer responsibilities to dissuade them from taking risks and can afford to wait for economic security.

"The study has important policy implications because it suggests that, unless things change, countries with aging populations—like most European countries—may expect a decline in entrepreneurial activity and possibly growth,." Minniti said.

Minniti added that the United States has never experienced this problem because of its historical embrace of new immigrants.

"Immigrants tend to be younger and have more children to help build new businesses. Obviously, our research can impact and contribute to the recent U.S. debate on immigration."