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The Impact of Regional Age Structure on Entrepreneurship

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  • Werner Bönte
  • Oliver Falck
  • Stephan Heblich

Abstract

Empirical studies based on individual data have found an inverse U-shaped relationship between age and the decision to start a business. Other studies have shown that becoming an entrepreneur is a regional event, with potential entrepreneurs benefiting from their local networks. This article links both strands of literature by introducing age-specific peer effects. Using changes in the age distribution of the population of western German regions over time, we found—in accordance with microlevel analyses—an inverse U-shaped relationship between the regional age structure and start-up activity in a region. Moreover, our findings suggest that the age-specific likelihood of becoming an entrepreneur changes with the size of the age cohort, pointing to the existence of age-specific peer effects.

Suggested Citation

  • Werner Bönte & Oliver Falck & Stephan Heblich, 2009. "The Impact of Regional Age Structure on Entrepreneurship," Economic Geography, Taylor & Francis Journals, vol. 85(3), pages 269-287, July.
    • Handle: RePEc:taf:recgxx:v:85:y:2009:i:3:p:269-287
    DOI: 10.1111/j.1944-8287.2009.01032.x
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