SOURCE: The Kauffman Foundation

The Kauffman Foundation

June 18, 2009 08:00 ET

Baby Boom Generation Is Driving an Entrepreneurial Boom Toward Economic Growth, Kauffman Foundation Study Indicates

Longer, Healthier Lives and Changes in Job Tenure Among Other Factors Making Entrepreneurship the 'New Mid-Life Crisis'

KANSAS CITY, MO--(Marketwire - June 18, 2009) - Economists know that entrepreneurship will drive the economy back to health, but many people may be surprised to learn that the baby boom generation is behind the wheel, according to a new study by the Ewing Marion Kauffman Foundation.

The study, "The Coming Entrepreneurship Boom," found that several facts have emerged in the course of Kauffman Foundation research that indicate the United States might be on the cusp of an entrepreneurship boom -- not in spite of an aging population but because of it. These factors include the shifting age distribution of the country, the continued decline of lifetime employment, the experience and tacit knowledge such employees carry with them, and the effects of the 2008-2009 recession on established sectors of the economy. The study follows research (http://www.kauffman.org/uploadedFiles/Education_Tech_Ent_061108.pdf) from Duke University's Vivek Wadhwa, also published by the Foundation, which found that the average age of U.S.-born technology founders when they started their companies was 39.

"The fact that the largest age group of our population is also the most entrepreneurial bodes well for the United States' economic future," said Robert E. Litan, vice president of Research and Policy at the Kauffman Foundation. "This study shows how several other emerging trends, from job tenure to regulatory changes due to the current recession, should facilitate entrepreneurship in coming years."

Contrary to popularly held assumptions, it turns out that over the past decade or so, the highest rate of entrepreneurial activity belongs to the 55-64 age group. The 20-34 age bracket, meanwhile, which is usually identified with swashbuckling and risk-taking youth (think Facebook and Google), has the lowest. Perhaps most surprising, this disparity occurred in the 11 years around the dot-com boom -- when the young entrepreneurial upstart became a cultural icon.

Other key findings include:

--  While people under 30 have historically jumped from job to job, the
    most striking development today has been the deep drop in the incidence of
    "lifetime" jobs among men over age 50. Long-term employment has fallen
    dramatically for people ages 35-64 over the past 50 years.
--  With longer life expectancies and greater health in later life, older
    generations may continue to start new firms -- or mentor young
    entrepreneurs.
--  Since the first Internet-era recession, transaction costs and barriers
    to entry have fallen for entrepreneurs of every age.
    

Dane Stangler, senior analyst at the Kauffman Foundation and author of the study, says these trends may continue through the current recession. "The very idea of 'too-big-to-fail' institutions has been permanently damaged," he writes. "Recent economic trends -- away from lifetime jobs and toward more and more new companies -- will thus gain even greater cultural traction."

The complete study is posted on www.kauffman.org.

About the Kauffman Foundation

The Ewing Marion Kauffman Foundation is a private nonpartisan foundation that works to harness the power of entrepreneurship and innovation to grow economies and improve human welfare. Through its research and other initiatives, the Kauffman Foundation aims to open young people's eyes to the possibility of entrepreneurship, promote entrepreneurship education, raise awareness of entrepreneurship-friendly policies, and find alternative pathways for the commercialization of new knowledge and technologies. It also works to prepare students to be innovators, entrepreneurs and skilled workers in the 21st century economy through initiatives designed to improve learning in math, engineering, science and technology. Founded by late entrepreneur and philanthropist Ewing Marion Kauffman, the Foundation is based in Kansas City, Mo. and has approximately $2 billion in assets. More information, visit www.kauffman.org, and follow the Foundation on www.twitter.com/kauffmanfdn.

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