According to recent data from the Bureau of Labor Statistics, the median age of the U.S. labor force was 42 years in 2016, up from 38 in 1996, and it’s projected to keep climbing. This is an alarming trend for the United States as our population is ageing.
As per the Journal of Political Economy, Entrepreneurship requires energy and creativity as well as business acumen. Some factors that contribute to entrepreneurship decline with age, but business skills increase with experience in high-level positions. Having too many older workers in society slows entrepreneurship. When older workers occupy key positions, they block younger workers from acquiring skills. A theory is formulated and tested using the Global Entrepreneurship Monitor data. A one standard deviation decrease in a country’s median age increases new business formation by 2.5 percentage points, which is about 40 percent of the mean rate. Furthermore, older societies have lower rates of entrepreneurship at every age
So is the answer for constant innovation, younger societies?
To measure entrepreneurship, if we were to look at two data points
a. Entrepreneurship enablement within countries
b. Median Age of entrepreneurs in these countries
We invariably assume that younger people are more willing to take risks, are more open to different busienss models and also more unincumbered.
The other important factor is gaining business acumen. Professional experience can only be gained through being in decision making positions. In countries with younger population, more young people in the workforce, leads to more younger people in decision making positions faster.
A case in point stated in the study is Brazil and Japan, both large economies. Brazil is one of the youngest of the large economies, with a median age of 26. Japan’s median age is 44. The rate of entrepreneurship in Brazil is over five times that of Japan.
So in Japan, at 30 you have invariably just started your career ; however; in Brazil, at 30 you have probably been in a decision making position for a longer time already.
The younger you are when you acquire your skills, the more likely you will use them extensively and the more time you will have to build upon those skills.
That’s why Silicon Valley had so much business formation. It has all these young people who acquired these tremendous skills quickly, then they left wherever they were, went out, and started businesses of their own
Diversity of immigration from countries where there are more younger people ( like India) , is visible in the number of companies started and the rate of success of these immigrants.