Why youth become entrepreneurs

August 2017

PEP projects in Africa, Asia, Latin America, and Eastern Europe investigate the factors that encourage youth entrepreneurship

A common strategy for reducing youth unemployment is promoting youth entrepreneurship, however, this requires a clear understanding of the many reasons why young people decide to start their own business. PEP-PAGE projects in Bangladesh, Chad, Ethiopia, Kenya, Pakistan, Argentina, the Democratic Republic of the Congo (DRC), and Macedonia, investigated the factors that encourage youth entrepreneurship.

Necessity vs opportunity

Findings from Bangladesh, Ethiopia and Chad, indicate that most young people who become entrepreneurs in these countries do so out of necessity, rather than as a profit-seeking activity. Similarly, the likelihood of youth entrepreneurship in Kenya is greater among married people, which is attributed to the need to provide for their family. In contrast, coming from a richer socioeconomic background is found to encourage youth entrepreneurship in Pakistan and Argentina.

Education and training

In the cases of Argentina and Pakistan, entrepreneurship is helped by higher levels of education and training. Additionally, participation in entrepreneurial training is found to increase youth entrepreneurship in Ethiopia and Pakistan. The results from the Punjab Province in Pakistan indicate that higher general education and computer literacy encourage youth entrepreneurship. In Chad, educational language seems to be a factor, with young people who choose Arabic instead of French more likely to become entrepreneurs.

In the DRC, while internal migration correlates to increased youth entrepreneurship in the informal sector, higher-educated migrants are more likely to create businesses in the formal sector. External migration of family members is also shown to affect youth entrepreneurship in Macedonia, with youth living in households that receive remittances considerably (up to 33%) more likely to establish their own business than youth and adults from non-recipient households.

This article is the second in a series presenting general conclusions and findings drawn from PAGE projects across the globe, highlighting a list of specific themes that have emerged as particular trends from the research teams’ perspectives following the evaluation of their countries’ priority issues.
See also:
Introducing a minimum wage can improve well-being
Supporting female entrepreneurship to reduce poverty
How migration and remittances affect welfare and employment at home


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