What Data on Older Households Tell Us About Wealth Inequality and Entrepreneurship Growth

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Entrepreneurial activity—a measure of a country’s dynamism and indicator of economic opportunity—can enhance economic growth through a number of channels. First, entrepreneurship fosters innovation through the development and marketability of advanced, often groundbreaking products and services. Second, small businesses tend to be more capital intensive than larger ones, which accelerates the adaptation and diffusion of new technologies and deepens an economy’s capital base. Third, starting and running one’s own business often allows entrepreneurs to better contribute their talent to economic activities over a longer, sustained period of time than in wage and salary employment.

Since the 1990s, entrepreneurship has become especially pronounced among older households, defined as those with heads of household age 50 and older. At the same time, entrepreneurship among younger households has fallen, slowing overall entrepreneurship in the United States.

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