Demographic Change and Business Dynamics in the EU

Igor Fedotenkov and Anneleen Vandeplas

No 251, European Economy - Discussion Papers from Directorate General Economic and Financial Affairs (DG ECFIN), European Commission

Abstract: Populations across the European Union are ageing. While concerns have been raised that ageing may reduce business dynamism, and, consequently, economic growth, this hypothesis has not yet been tested empirically in an EU context. To address this gap, this paper investigates the relationship between demographic structure and firm entry rates in the European Union. The results suggest that the size of the 30-44 age group has the strongest positive effect on firm entry. Alternative estimation methods and the inclusion of control variables do not change this conclusion. It is in line with the notion that age has a hump-shaped effect on the propensity to engage in entrepreneurship. In addition, younger age cohorts are found to exert a more negative impact on firm entry than older age cohorts. Rising educational attainment may partially offset the adverse effects of demographic ageing on business dynamism in the years ahead

JEL-codes: D22 J11 J15 L29 M13 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2026-06
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Persistent link: https://EconPapers.repec.org/RePEc:euf:dispap:251

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