IDEAS home Printed from https://ideas.repec.org/p/zbw/glodps/850.html
   My bibliography  Save this paper

Macroeconomic Contractions during Impressionable Years and Entrepreneurship in Later Adulthood

Author

Listed:
  • Sotirakopoulos, Panagiotis
  • Guven, Cahit
  • Ulker, Aydogan
  • Graham, Carol

Abstract

We argue that past events experienced during the critical ages of 18-25 can influence an individual's future entrepreneurship based on the "impressionable years hypothesis". Accordingly, we empirically investigate the relationship between bad economic conditions during youth and later-life entrepreneurship using Gallup from 2009 to 2014. The identification is achieved through variations across 77 countries and age cohorts born between 1954 and 1989. Our findings indicate that bad economic conditions when young can significantly predict higher entrepreneurship in later life. For example, experiencing at least one economic contraction during youth increases future self-employment/business ownership propensities by about 6/10% at the outcome means. Graduating from college and entering the job market in a bad economy cannot explain our results. Findings are robust to numerous methods of measuring economic contractions and controlling for behavioural measures as well as economic shocks experienced before and after the impressionable years.

Suggested Citation

  • Sotirakopoulos, Panagiotis & Guven, Cahit & Ulker, Aydogan & Graham, Carol, 2021. "Macroeconomic Contractions during Impressionable Years and Entrepreneurship in Later Adulthood," GLO Discussion Paper Series 850, Global Labor Organization (GLO).
    • Handle: RePEc:zbw:glodps:850
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/234428/1/GLO-DP-0850.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Konon, Alexander & Fritsch, Michael & Kritikos, Alexander S., 2018. "Business cycles and start-ups across industries: An empirical analysis of German regions," Journal of Business Venturing, Elsevier, vol. 33(6), pages 742-761.
    2. Audrey Light & Robert Munk, 2018. "Business Ownership versus Self†Employment," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 57(3), pages 435-468, July.
    3. Ekelund, Jesper & Johansson, Edvard & Jarvelin, Marjo-Riitta & Lichtermann, Dirk, 2005. "Self-employment and risk aversion--evidence from psychological test data," Labour Economics, Elsevier, vol. 12(5), pages 649-659, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sotirakopoulos, Panagiotis & Mount, Matthew P. & Guven, Cahit & Ulker, Aydogan & Graham, Carol, 2023. "A tale of two life stages: The imprinting effect of macroeconomic contractions on later life entrepreneurship," Journal of Business Venturing, Elsevier, vol. 38(4).
    2. Rachel G. Childers, 2011. "Being One'S Own Boss: How Does Risk Fit In?," The American Economist, Sage Publications, vol. 56(1), pages 48-58, May.
    3. Erik Stam & Roy Thurik & Peter van der Zwan, 2010. "Entrepreneurial exit in real and imagined markets," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 19(4), pages 1109-1139, August.
    4. Raziiakhan Abdieva & Burulcha Sulaimanova & Kamalbek Karymshakov, 2019. "Gender differences, risk attitude and entrepreneurship in Kyrgyzstan," Economics and Business Letters, Oviedo University Press, vol. 8(1), pages 17-30.
    5. Nicos Nicolaou & Scott Shane, 2019. "Common genetic effects on risk-taking preferences and choices," Journal of Risk and Uncertainty, Springer, vol. 59(3), pages 261-279, December.
    6. Claudio A. Bonilla & Pablo A. Gutiérrez Cubillos, 2021. "The effects of ambiguity on entrepreneurship," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 30(1), pages 63-80, February.
    7. Bonin, Holger & Dohmen, Thomas & Falk, Armin & Huffman, David & Sunde, Uwe, 2007. "Cross-sectional earnings risk and occupational sorting: The role of risk attitudes," Labour Economics, Elsevier, vol. 14(6), pages 926-937, December.
    8. de Blasio, Guido & De Paola, Maria & Poy, Samuele & Scoppa, Vincenzo, 2018. "Risk Aversion and Entrepreneurship: New Evidence Exploiting Exposure to Massive Earthquakes in Italy," IZA Discussion Papers 12057, Institute of Labor Economics (IZA).
    9. Nathalie Colombier & Laurent Denant Boemont & Youenn Loheac & David Masclet, 2008. "Risk aversion: an experiment with self-employed workers and salaried workers," Applied Economics Letters, Taylor & Francis Journals, vol. 15(10), pages 791-795.
    10. Wenyuan Liu & Ting Ren, 2021. "Family ties and employment behavior: The role of financial intermediaries," Review of Development Economics, Wiley Blackwell, vol. 25(1), pages 48-75, February.
    11. Simon Parker, 2007. "Which firms do the entrepreneurs come from?," Economics Bulletin, AccessEcon, vol. 10(10), pages 1-9.
    12. Berger, Melissa & Fellner-Röhling, Gerlinde & Sausgruber, Rupert & Traxler, Christian, 2016. "Higher taxes, more evasion? Evidence from border differentials in TV license fees," Journal of Public Economics, Elsevier, vol. 135(C), pages 74-86.
    13. Caliendo, Marco & Künn, Steffen & Weißenberger, Martin, 2016. "Personality traits and the evaluation of start-up subsidies," European Economic Review, Elsevier, vol. 86(C), pages 87-108.
    14. Donna Brown & Jonathan Wadsworth, 2022. "Accidents will happen: (de)regulation of health and safety legislation, workplace accidents and self employment," CEP Discussion Papers dp1855, Centre for Economic Performance, LSE.
    15. Murat Yalcintas & Oyk㜠Iyigãœn & Gokhan Karabulut, 2023. "Personal Characteristics And Intention For Entrepreneurship," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 68(02), pages 539-561.
    16. Parker, Simon C., 2006. "A Selection-Based Theory of the Transition from Employment to Entrepreneurship: The Role of Employer Size," IZA Discussion Papers 2071, Institute of Labor Economics (IZA).
    17. Simon Parker, 2014. "Who become serial and portfolio entrepreneurs?," Small Business Economics, Springer, vol. 43(4), pages 887-898, December.
    18. Wladislaw Mill & Cornelius Schneider, 2023. "The Bright Side of Tax Evasion," CESifo Working Paper Series 10615, CESifo.
    19. Sara Amoroso & Benedikt Herrmann & Alexander S. Kritikos, 2023. "The Role of Regulation and Regional Government Quality for High Growth Firms: The Good, the Bad, and the Ugly," Discussion Papers of DIW Berlin 2053, DIW Berlin, German Institute for Economic Research.
    20. Nadia Simoes & Nuno Crespo & Sandrina B. Moreira, 2016. "Individual Determinants Of Self-Employment Entry: What Do We Really Know?," Journal of Economic Surveys, Wiley Blackwell, vol. 30(4), pages 783-806, September.

    More about this item

    Keywords

    Impressionable Years Hypothesis; Entrepreneurship; Self-employment; Business Ownership; Economic Contractions; Gallup Data;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:glodps:850. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/glabode.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.