Wharton: Why declining entrepreneurship in the U.S. is not a concern

Entrepreneurship in the U.S. has declined in recent decades because high-skilled college graduates have found that they can earn more in well-paying jobs than starting their own business. Cheaper capital and lower prices of capital goods also helped businesses become more profitable and therefore increased their ability to hire high-skilled workers who would otherwise have become entrepreneurs.

Those “technological improvements have changed the incentives of individuals to start their own business,” according to a new research paper by Wharton finance professor Sergio Salgado titled “Technical Change and Entrepreneurship.” They are responsible for three-quarters of the decline in entrepreneurship, the paper noted.

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