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Being their own boss: A review of American demography and entrepreneurship

AEI 2020.03.04
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Economically beneficial entrepreneurship is declining in America. This decline is not caused by a change in individual-level desire to be an entrepreneur or by fewer people trying to make entrepreneurship work, but rather by an inability to make new entrepreneurial endeavors take off. Academic research suggests that this difficulty in achieving scale is directly related to demography: An older population with slower labor force growth makes it much harder for new firms on both the supply and demand side of the economic equation. Even startups that do “make it” and launch initial public offerings increasingly show signs of weakness in the market. While policymakers have some tools to fight back against these trends, demographically rooted trends are extremely unlikely to change rapidly.

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