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Demographics and Entrepreneurship

Author

Listed:
  • Edward Lazear

    (Stanford University)

  • James Liang

    (Peking University)

  • Hui Wang

    (Peking University)

Abstract

Entrepreneurship requires creativity and business acumen. Creativity may decline with age, but business skills increase with experience in high level positions. Having too many older workers in society slows entrepreneurship. Not only are older workers less innovative, but more significant is that when older workers occupy key positions they 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.

Suggested Citation

  • Edward Lazear & James Liang & Hui Wang, 2014. "Demographics and Entrepreneurship," Discussion Papers 14-003, Stanford Institute for Economic Policy Research.
    • Handle: RePEc:sip:dpaper:14-003
    as

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    References listed on IDEAS

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    More about this item

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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