Abogados

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?
Interest Is There

One common explanation is that today's youth aren't as interested in business ownership as their parents' and grandparents' generations. But there's little evidence to support this. In fact, interest seems to be holding steady. A Kauffman Foundation study of college freshmen found it moved in a tight band between 2.1 percent and 3.7 percent from 1978 through 2008. Moreover, the rate of interest in the 1976-through-1985 cohorts and the 1990-through-1999 cohorts was lower than that among the 2003 and 2004 cohorts, yet the current self-employment rate of people from the 2003 and 2004 cohorts is lower than that of people from the earlier cohorts.

A second explanation is that interest in entrepreneurship increases with age. This argument, too, isn't supported. A 2001 Dartmouth College paper found that as people get older they become less likely to want to be self-employed, but more likely to actually go into business for themselves.