The impact of regional age structure on entrepreneurship in Canada
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Date
2016
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University of New Brunswick
Abstract
Due to decreasing birth rate and mortality rate in many countries, ageing has become a global issue in today’s world. Ageing directly impacts business and the overall economy of a nation. Empirical studies have found an inverse U-shaped relationship between age and the decision to start a business using micro-level data. Some studies have shown that the decision to become an entrepreneur is a regional phenomenon. Bronte, Falck & Heblich (2009) explored the effect of demographic factors and age on business startups in Germany using an aggregate data set and a count data model. They found that an inverse U-shaped relationship between the regional age structure and start-up activity in a region at the aggregate level. This report adopts a similar methodology and uses a longitudinal data set to examine the relationship between age structure and regional business activities in Canada from 1988 to 2014. Results show that differences in the age structures do contribute to the variation in the business activities across the Canadian provinces, which has strong policy implications for provincial governments to design policies directed at promoting entrepreneurial activities within their provinces. Moreover, our findings suggest that the age-specific likelihood of becoming an entrepreneur changes over time, indicating the existence of age-specific peer effects.