Policymakers often point to entrepreneurship as a way to combat unemployment among twentysomethings. But it's an unrealistic solution, says Scott Shane
Across almost all industrialized countries, unemployment rates are
highest among people just out of college. In the U.S., 17.2 percent of
20- to 24-year-olds are out of work. Clearly we need to do something to
remedy this problem now and prevent it in the future.
Policymakers
often talk about increasing the number of young people who become
entrepreneurs. While I'd like to see that happen too, the problem is
very few young people start their own businesses. The share of employed
people ages 20 to 24 who run their own incorporated businesses is only
0.3 percent, according to the most recent Bureau of Labor Statistics
data. That's lower than in any other age group except 16 to 19, and is
1/25th the rate among those ages 65 to 69.
Developing policy to
increase rates of entrepreneurship among young people requires an
understanding of why young people tend not to start their own
businesses. So why aren't more young people entrepreneurs?