Age matters: How demographics influence aggregate entrepreneurship

The age distribution of a population may influence aggregate entrepreneurship and economic growth. Because of rigidities in the mobility of resources and the substitutability of employment across age groups, countries whose populations are excessively skewed toward old or young cohorts may experience low levels of entrepreneurial activity. We develop a model characterizing the conditions sufficient for aggregate entrepreneurship to decrease as a population ages or becomes younger. At a time when poorer countries confront unprecedented increases in population and developed ones see their populations aging, we provide important insights on the relationship between demographic structure, aggregate entrepreneurship, and growth.