One of the consequences of aging populations in the West that may sometimes not be fully incorporated into public policy is that the pool of folks inclined to take entrepreneurial risks declines as a share of the population.
That “sweet spot” for business adventuring appears to be around the ages of 25-49, according to a new book edited by the Fraser Institute’s Jason Clemens and Steven Globerman titled Demographics and Entrepreneurship: Mitigating the Effects of an Aging Population.
The book finds that cohort of the population to be shrinking in Canada, the United States, the United Kingdom and Australia. Small business startups are a key indicator of economic health, yet most industrialized countries report declining startup rates that somewhat parallel these demographic changes.
Yours truly is happy to boast a chapter in Demographics and Entrepreneurship, too; but this 496-page volume’s other contributors offer what amounts to a major, up-to-date survey of the latest thought on the effects of government policy on entrepreneurship. While, naturally, countries have their own unique characteristics affecting entrepreneurship and prosperity, a common underlying factor typifying industrialized regions is aging populations.
The editors say “there is little governments can do to stem demographic change.” But on the other hand, governments can do plenty to make sure that those who are inclined to shoulder the risks of entrepreneurship enjoy the best chances of success. That will benefit everyone.
Governments can, for example, improve business and job-creation incentives and the overall entrepreneurial environment by (as the video above notes) “improving policies that affect entrepreneurs”:
- Lower personal and business taxes;
- Reduce or eliminate capital gains taxes;
- Reduce red tape;
- Reform banking and financial regulations to improve access to capital;
- Attend to immigration in a manner that attracts entrepreneurs;
- Improve education in business leadership.
Expanding prosperity will be rooted in improving the environment for the increasingly lower proportion of movers and shakers via such steps.
Furthermore, broadly, in both government and business, leaders and influencers need to help to foster a culture of improved entrepreneurship.
Among plenty else, the book is loaded with updated findings on theoretical and evidence-based relationships between entrepreneurship and prosperity (ch. 1), rates of business startups in different countries (ch. 3), effects of taxation (chs. 4 and 5) and financial regulation (ch. 6), universities and the “entrepreneurship ecosystem (ch. 7), and immigrant entrepreneurship (ch. 9).
As the editors conclude in a landing page created for the book, “Since demographic trends cannot be easily reversed, countries will have to improve the environment in which entrepreneurs and businesses operate, to encourage more and better entrepreneurs.”
That’s good advice even when the entrepreneurial pool is growing.