How Wealth and Age Interact to Affect Entrepreneurship

43 Pages Posted: 31 Jan 2025

See all articles by Philippe d'Astous

Philippe d'Astous

HEC Montreal - Department of Finance

Vyacheslav Mikhed

Federal Reserve Bank of Philadelphia

Sahil Raina

University of Alberta - School of Business

Barry Scholnick

University of Alberta - Department of Marketing, Business Economics & Law

Date Written: January, 2025

Abstract

Using wealth windfalls from lottery winnings and matched employer-employee tax files, we compare the effect of additional wealth on the entrepreneurial activity of older and younger individuals. We find that additional wealth leads older winners (aged 55 and older) to reduce business ownership and scale. In contrast, additional wealth leads younger winners to increase business ownership and performance. We also show that extra lottery wealth reduces the wage labor supply of both younger and older individuals. Thus, while younger lottery winners reduce wage labor to increase entrepreneurship, older lottery winners reduce both wage labor and entrepreneurship to retire

Keywords: Wealth, Age, Entrepreneurship, Labor Supply

JEL Classification: G5, G51, J22, L26

Suggested Citation

d'Astous, Philippe and Mikhed, Vyacheslav and Raina, Sahil and Scholnick, Barry, How Wealth and Age Interact to Affect Entrepreneurship (January, 2025). FRB of Philadelphia Working Paper No. 25-3, Available at SSRN: https://ssrn.com/abstract=5118631 or http://dx.doi.org/10.21799/frbp.wp.2025.03

Philippe D'Astous (Contact Author)

HEC Montreal - Department of Finance ( email )

3000 Chemin de la Cote-Sainte-Catherine
Montreal, Quebec H3T 2A7
Canada

Vyacheslav Mikhed

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

Sahil Raina

University of Alberta - School of Business ( email )

2-32B Business Building
Edmonton, Alberta T6G 2R6
Canada

HOME PAGE: http://sites.ualberta.ca/~sraina/

Barry Scholnick

University of Alberta - Department of Marketing, Business Economics & Law ( email )

Edmonton, Alberta T6G 2R6
Canada

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