Can youth entrepreneurship work?

©Blend images/Alamy

Larry Page and Sergey Brin were young doctoral students when they created the company we now know as Google. Virgin’s Richard Branson started out in business as a teenager selling records. These big names are just part of a long list of young entrepreneurs that made it in business, a list that could include the founders of Facebook, e-Bay, France’s Free telecom and more.

Beyond such icons, readers of this article may know of less celebrated but nonetheless successful neighbours or friends from school who started their own businesses at a young age. They may also know of some who failed.

Making a go of it in business is not easy, but the idea is catching on, not least among the many young people facing a crisisravaged job market. Indeed, policymakers are also increasingly talking of youth entrepreneurship as a possible way of reducing youth unemployment. Are they right to place such hopes in what is, after all, an inherently risky pursuit? What, if anything, can policymakers do to give young people a start in business?

Youth Entrepreneurship, a policy brief prepared by the OECD with EU support, presents some answers to these questions, and some reality checks too. For instance, young 20-30-year-olds are far more interested in self-employment than older age groups, and though inexperienced and lacking in finances, see entrepreneurship as a potential career. However, only 4% of 15-24 year-olds are selfemployed in the EU, mostly in very small businesses, compared with 15% of adults generally. True, this low score could reflect the fact that many of young people study till their mid-20s, but also reflect barriers to setting up a business.

A closer look at that 4% can guide policy thinking in addressing them. For instance, youth-operated businesses are more likely than adult-driven ones to be involved in sectors such as construction and information technology. They operate locally, but are more open than older entrepreneurs to becoming more internationally oriented. Many of them operate on a part-time basis, which helps lower the risks and build up experience. This has practical advantages for education too: in the US, over 5% of young people in post-secondary education use part-time self-employment to fund their studies, for instance. But what about the success rate? No start-up is easy, and businesses run by young entrepreneurs have lower survival rates than those of older entrepreneurs. This is hardly surprising, given the many barriers young people face by way of experience, finance, networks, etc., and the very competitive sectors in which they tend to operate.

However, there is one encouraging trend which policymakers should seize upon: young people’s businesses that do survive have on average more growth potential than those of older entrepreneurs. Among businesses that survived three years, according to surveys, those run by people under 30 years old had an average growth rate of 206%—nearly double the growth rate of businesses run by those over 40.

Youth Entrepreneurship lists an array of steps for policymakers to follow, covering such issues as how to nurture entrepreneurial skills, provide advice, mentoring and financial support, and address infrastructure needs. It also contains some enlightening examples, of financing from Canada, the Think Big initiative in Europe, Project GATE in the US, and more.

As the authors admit, more data and learning is clearly needed to build better youth entrepreneurship policies, but the underlying message of this policy brief is clear: though young entrepreneurship is risky and should not be seen as a panacea for tackling unemployment, it has the potential to provide many people with real opportunities. Policymakers could do a lot more to make youth entrepreneurship happen, and by extension, bring benefits for society as a whole. Rory Clarke

© OECD Observer 294 Q1 2013

OECD (2012), Policy Brief on Youth Entrepreneurship: Entrepreneurial Activities in Europe, OECD LEED Division, Paris.

See also http://www.oecd.org/employment/

Produced with EU support.




Economic data

GDP growth: +0.7% Q2 2017 year-on-year
Consumer price inflation: 2.3% Sept 2017 annual
Trade: +1.4% exp, +1.7% imp, Q2 2017
Unemployment: 5.7% Sept 2017
Last update: 14 Nov 2017

E-Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive paper editions delivered to you directly


Online edition
Previous editions

Don't miss

  • Papers show “past coming back to haunt us”: OECD Secretary-General Angel Gurria tells Sky News that the so-called "Paradise Papers" show a past coming back to haunt us, but one which is now being dismantled. Please watch the video.
  • The annual OECD Eurasia Week takes place in Almaty, Kazakhstan 23-25 October. Writing in The Astana Times, OECD Secretary-General Angel Gurría urges Eurasia countries to stay the course on openness and international integration, which has brought prosperity but also disillusionment, notably regarding inequality. The OECD is working with this key region, and Mr Gurría urges Eurasia to focus on human capital and innovation to enhance productivity and people’s well-being. Read more.
  • When someone asks me to describe an ideal girl, in my head, she is a person who is physically and mentally independent, brave to speak her mind, treated with respect just like she treats others, and inspiring to herself and others. But I know that the reality is still so much different. By Alda, 18, on International Day of the Girl. Read more.
  • Globalisation’s many benefits have been unequally shared, and public policy has struggled to keep up with a rapidly-shifting world. The OECD is working alongside governments and international organisations to help improve and harness the gains while tackling the root causes of inequality, and ensuring a level playing field globally. Please watch.
  • Read some of the insightful remarks made at OECD Forum 2017, held on 6-7 June. OECD Forum kick-started events with a focus on inclusive growth, digitalisation, and trust, under the overall theme of Bridging Divides.
  • Checking out the job situation with the OECD scoreboard of labour market performances: do you want to know how your country compares with neighbours and competitors on income levels or employment?
  • Trade is an important point of focus in today’s international economy. This video presents facts and statistics from OECD’s most recent publications on this topic.
  • How do the largest community of British expats living in Spain feel about Brexit? Britons living in Orihuela Costa, Alicante give their views.
  • Brexit is taking up Europe's energy and focus, according to OECD Secretary-General Angel Gurría. Watch video.
  • OECD Chief Economist Catherine Mann and former Bank of England Governor Mervyn King discuss the economic merits of a US border adjustment tax and the outlook for US economic growth.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at www.oecd.org/careers .

Most Popular Articles

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2017