Age, labour market situation and the choice of risky innovative entrepreneurship

ABSTRACT

We examine the effect of age and the moderating effect of labour market situations on individuals’ decisions to enter into risky innovative entrepreneurship. Using population-level data from 94 countries from the Global Entrepreneurship Monitor database we find that although age is negatively related to the choice of innovative entrepreneurship, the age–innovative entrepreneurship choice relationship is moderated by the labour market status of the individual. More specifically, full-time employed older individuals, who are most likely to become successful entrepreneurs, are less likely to choose risky innovative entrepreneurship. Considering that innovative entrepreneurship is crucial for economic growth, our results point to the importance of facilitating employed middle-age and older individuals’ entries into innovative entrepreneurship especially in a context of ageing societies.

KEYWORDS:

• Entrepreneurship
• innovation
• age
• labour market
• risk

JEL CLASSIFICATION:

• M13
• J14

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ The total risk of entrepreneurship comprises the risk of choosing entrepreneurship over wage employment plus the risk inherent in the choice of a given entrepreneurial opportunity. For example, innovative opportunity is riskier than imitative opportunity.

² Algeria, Angola, Anguilla, Argentina, Australia*, Austria*, Bangladesh, Barbados, Belgium*, Belize, Bolivia, Bosnia and Herzegovina, Botswana, Brazil, Bulgaria, Burkina Faso, Cameroon, Canada*, Chile*, China, Colombia, Costa Rica, Croatia, the Czech Republic*, Denmark*, Ecuador, Egypt, El Salvador, Estonia*, Ethiopia, Finland*, France*, Georgia, Germany*, Ghana, Greece*, Guatemala, Hungary*, India, Indonesia, Iran, Ireland*, Israel*, Italy*, Jamaica, Japan*, Kazakhstan, Kosovo, Latvia*, Lebanon, Libya, Lithuania*, Luxembourg*, Macedonia, Malawi, Malaysia, Mexico*, Morocco, Namibia, the Netherlands*, Nigeria, Norway*, Pakistan, Panama, Peru, the Philippines, Poland*, Portugal*, Puerto Rico, Qatar, Romania, Russia, Senegal, Singapore, Slovakia*, Slovenia*, South Africa, South Korea*, Spain*, Suriname, Sweden*, Switzerland*, Taiwan, Thailand, Trinidad and Tobago, Tunisia, Turkey*, Uganda, the United Arab Emirates, the United Kingdom*, the United States of America*, Uruguay, Vietnam and Zambia. * indicates OECD countries.

³ Part-time employees are included in this category because we assume that their risk aversion is closer to unemployed individuals than to fully employed individuals. However, excluding part-time employees does not affect the results, as presented in the following robustness test.