Age effect on entry to entrepreneurship: embedded in life expectancy

Abstract

Major improvements in life expectancies associate with interesting societal transformations. By changing individuals’ preferences for engaging in both productive and non-productive activities across their lifespan, changes in life expectancy paradoxically affect both the financing and the costs of social welfare systems. This raises the importance of knowledge on how life expectancy affects the relationship between age and entry to entrepreneurship. Using lifespan theory, we propose a conceptual model for understanding how age-related psychological effects (i.e., risk-willingness and self-efficacy) on individuals’ entry to entrepreneurship are embedded in life expectancy at the societal level. Based on data from 34 Organization for Economic Co-operation and Development countries, our analysis shows that increased life expectancy at the societal level moves the peak for entrepreneurial entry toward older ages and creates an evener entry distribution across working ages. The results suggest that this effect is driven partly by a cross-level moderation from life expectancy on the relationship between age and individuals’ risk-willingness and self-efficacy, which in turn promotes entry to entrepreneurship. These findings highlight the importance of considering entrepreneurial activity in the context of age and of future-time perspective in terms of life expectancy.