Don’t Bank On Self-Employment

If the news is any indicator then entrepreneurship among people under 18 is on the rise. However, The Independent feels that it is all a little premature.

The benefits of youth entrepreneurship are obvious. However, the notion of entrepreneurship being the key to solving the youth employment crisis is certainly exaggerated. Indeed, there are at least three important reasons for caution:

  • Self-employment is by definition risky. Some of the most successful entrepreneurs failed several times before creating the businesses that finally proved sustainable.
  • Self-employment is mostly necessity-driven in developing countries. In Latin America, for example, over 90 percent of the young entrepreneurs had no other choice. The people concerned normally dropped out of school early and then engaged in very basic economic activities with low productivity, such as retail commerce. Most of them belonged to the two poorest income quintiles and would have preferred other employment opportunities.
  • Running a business of one’s own requires particular skills (like keeping accounts) and attitudes (like risk awareness). Even practitioners who promote youth entrepreneurship say the share of potential entrepreneurs is only about 20 percent of any given population.

What are your thoughts?

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