This paper investigates the relationship between the youth bulge and entrepreneurship, with the quality of institutions acting as a moderating factor across diverse income levels. The youth bulge, defined as the proportion of young people in a population, is recognized as one of the drivers of economic development. However, its relationship with entrepreneurship, particularly when moderated by institutional quality, has not been widely explored. This thesis examines this relationship using two different indicators of entrepreneurship and a dataset covering a wide range of countries across the income spectrum.
The study finds evidence supporting a U-shaped relationship between income levels and New Business Density but finds no evidence of such a relationship between income levels and Total Early-stage Entrepreneurial Activity. The empirical analysis reveals that youth has a negative effect on New Business Density in low-income countries and a positive effect in high-income countries, while it has a positive effect on entrepreneurial activity across all income levels. The quality of institutions plays a significant moderating role in shaping this relationship. A one percentage point increase in the youth bulge causes an increase in Total Early-stage Entrepreneurial Activity by approximately 0.6 percentage points and an increase in the New Business Density index by approximately 0.1 points. These results are robust across all models, with insufficient evidence for the negative effect of the youth bulge on New Business Density in lower-income countries. Additionally, the study provides evidence of a U-shaped relationship between the shadow economy and entrepreneurship, as well as between Governance Indicators and entrepreneurship.
Table of Contents
ABSTRACT
1. INTRODUCTION:
2. LITERATURE REVIEW:
3. THEORETICAL FRAMEWORK:
4. DATA AND METHODOLOGY:
5. EMPIRICAL RESULTS:
6. DISCUSSION:
7. CONCLUSIONS:
8. RECOMMENDATIONS:
Research Objectives and Topics
This thesis investigates the relationship between the youth bulge and entrepreneurship, analyzing how institutional quality functions as a moderating factor across different income levels. It seeks to determine whether a higher percentage of young people leads to increased entrepreneurial activity or acts as a destabilizing force depending on the economic and governance environment of a nation.
- Impact of the youth bulge on entrepreneurship indicators (New Business Density and Total early-stage Entrepreneurial Activity).
- Moderating role of governance and institutional quality in varied economic contexts.
- Influence of the shadow economy on entrepreneurial entry.
- Analysis of startup costs and education levels as indirect drivers of entrepreneurial ventures.
Excerpt from the Book
1. INTRODUCTION:
Whether they are aged 15-29 or 15-24, youths play a key role in the economic, technological and every aspect of development of a nation. This topic is catching an increased interest from academics and policymakers. They bring work force, fresh ideas and lead the development as they acquire knowledge and add to it from their own contributions in all fields, driven by the fresh mind, love of discovery and fearlessness. But they also pose a challenge, with their lack of knowledge of the consequences of their actions and the low responsibilities they have, they may become destabilizers of development and with the possibility of becoming criminals with the low quality of education (Rud 2015).
Many studies have been done on the relationship between Youth Bulge and political stability, identifying the Youth Bulge (percentage of people aged 15-24) as a driver of political instability (Jack A. Goldstone 2002; URDAL 2006) emphasizing the importance of employment as a stabilizer. And others on the importance of entrepreneurship and its relation to political stability (Dutta et al. 2013) and the relation between entrepreneurship and unemployment with the moderation of the institutions’ quality (Afolabi et al. 2022). This paper studies the relationship between Youth Bulge and entrepreneurship, with the possibility of institutions quality as a moderating effect. Institutions quality has been shown In multiple researches that it has a positive effect on entrepreneurship (Chambers and Munemo 2019; Sambharya and Musteen 2014; Farzanegan 2014). Nevertheless, when it comes to Youth Bulge, it can be difficult to identify the effect of institutions quality on entrepreneurship. Necessity-driven entrepreneurship is mainly driven by unemployment (Fairlie and Fossen 2017); “Entrepreneurial activity is significantly greater in countries with lower levels of development, greater income inequality and considerable levels of unemployment.” (Simón-Moya et al. 2014). And youths unemployment would be higher in countries with high youths percentages. But it also might lead to an increase in entrepreneurial activities (Afolabi et al. 2022) or political instability (F. Azeng and U. Yogo 2013) which in return has a negative effect on entrepreneurship (Dutta et al. 2013; Mark and Nwaiwu 2015).
Summary of Chapters
1. INTRODUCTION: Outlines the significance of the youth bulge in national development, discusses the potential for economic contribution versus instability, and presents the paper's core research motivation regarding the moderating role of institutions.
2. LITERATURE REVIEW: Reviews existing academic perspectives on the relationship between age, entrepreneurship, and institutional quality, identifying key variables and limitations in previous panel studies.
3. THEORETICAL FRAMEWORK: Defines core concepts such as youth entrepreneurship and the youth bulge threshold, providing the theoretical basis for how corruption, governance, and democracy impact entrepreneurial entry.
4. DATA AND METHODOLOGY: Details the sources of data (WDI, WGI, GEM), explains the construction of independent and control variables, and outlines the panel research hypotheses and the regression models utilized.
5. EMPIRICAL RESULTS: Presents and interprets the regression outcomes for different models, shedding light on the statistical correlations between youth bulge, income thresholds, governance, and business density.
6. DISCUSSION: Analyzes the empirical findings, deliberating on the indirect and moderating effects identified in the data and comparing them with established theories like "greasing the wheels."
7. CONCLUSIONS: Summarizes the study’s contributions, confirming the U-shaped relationship between income and entrepreneurship and discussing the varying impact of the youth bulge across income levels.
8. RECOMMENDATIONS: Provides policy suggestions, emphasizing the need for improved business environments and addressing the informal sector to foster sustainable entrepreneurial growth.
Keywords
Youth Bulge, Entrepreneurship, Institutional Quality, Governance, New Business Density, Economic Development, Panel Data Analysis, Corruption, Shadow Economy, Regulatory Quality, Political Stability, Income Levels, Necessity-driven Entrepreneurship, Opportunity-driven Entrepreneurship.
Frequently Asked Questions
What is the primary focus of this research?
The research examines the relationship between the "youth bulge" (the proportion of young people in a population) and entrepreneurship, specifically investigating how the quality of institutions acts as a moderating factor in this connection.
What are the central thematic fields?
The study centers on demographics, economic development, institutional economics, and their specific interaction with entrepreneurial activity across diverse global economies.
What is the main research question or objective?
The objective is to understand if a large youth population promotes or hinders entrepreneurship and how institutional quality determines the nature of this influence across different income levels.
Which scientific methodology is employed?
The author uses empirical panel data analysis, incorporating 164 countries and employing econometric methods to analyze variables from datasets like the World Bank and Global Entrepreneurship Monitor (GEM).
What topics are covered in the main body?
The main body covers the theoretical framework of entrepreneurship, extensive literature review, detailed methodology for model building, empirical results based on regression models, and a discussion of these findings in real-world policy contexts.
Which keywords characterize the work?
Key terms include Youth Bulge, Entrepreneurship, Institutional Quality, Governance, New Business Density, and Economic Development.
Why are there two different indicators for entrepreneurship?
The author uses both "New Business Density" (tracking formal registered businesses) and "Total Early-Stage Entrepreneurial Activity" (capturing broader engagement) to provide a more holistic view that accounts for both formal and informal economic activity.
What significance does the "income threshold" have in this study?
The study identifies a threshold (at a natural logarithm of 9 for GDP per capita) because the relationship between the youth bulge and entrepreneurship shifts significantly as economies transition from lower-income to higher-income status.
- Arbeit zitieren
- Muhammad Mrad (Autor:in), 2023, The Impact of Youth Bulge on Entrepreneurship. The Moderating Role of Institutional Quality Across Different Income Levels, München, GRIN Verlag, https://www.grin.com/document/1496128
