Demographic change will be one of the major challenges for economic policy in the developed world in the next decades. In this article, we analyze the relationship between age structure and the number of startups. We argue that an individual’s decision to start a business is determined by his or her age and, therefore, that a change in a region’s age distribution affects the expected number of startups in the region. Using German regional data, we estimate a count-data model and find that the expected number of startups is positively influenced by the fraction of individuals of working age—20–64 years old. A more detailed analysis of the working-age distribution suggests that startups in knowledge-based (high-tech) manufacturing industries are affected by changes in this distribution whereas firms in other industries are not. In particular, increases in the fraction of individuals in the 20–30 age range and individuals in the 40–50 age range have a positive effect on the number of high-tech startups.
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number
CESifo Working Paper No. 2115.
Find related papers by JEL classification: J10 - Labor and Demographic Economics - - Demographic Economics - - - General L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship O30 - Economic Development, Technological Change, and Growth - - Technological Change - - - General R11 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Analysis of Growth, Development, and Changes
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