New research reveals a dual role for digitalization^[1] among older workers^[2]: replacing routine jobs while fostering entrepreneurial opportunities. Empirical evidence shows a higher self-employment rate among older workers, indicating a nuanced relationship between age and entrepreneurship. Embracing digitalization’s benefits while addressing its challenges requires a multifaceted approach. There are opportunities policymakers can consider to help older entrepreneurs navigate the impact of digitalization and bolster economic growth.

Digitalization & Employment Dynamics

Digitalization is a key driver of economic growth. However, concerns arise regarding its impact on workers, specifically job displacement due to technological and economic shifts (e.g., automation of routine tasks, rise of remote work, and productivity enhancement from digitalization). While older workers are vulnerable to job loss due to digitalization, they can also benefit from digitalization’s facilitation of entrepreneurship.

Impact of Digital Exposure

Digitalization’s impact on entrepreneurship varies with digital exposure levels. From highest to lowest digital exposure, these sectors include: knowledge-intensive, capital-intensive, service, business-to-business, labor-intensive, and quasi-public and/or highly localized sectors.

Workers with high digital exposure benefit from digitalization’s “pull” mechanism into entrepreneurship. High digital exposure sectors include knowledge-intensive sectors that are highly digitized across most dimensions. This includes sectors of information and communications technology and capital-intensive sectors with the potential to further digitize their physical assets (including Media, Professional Services, Finance, and Insurance). For those sectors, a high level of digital exposure brings about many more entrepreneurship opportunities that “pull” workers into entrepreneurship. This “pull” effect widens with age.

Older workers with higher digital exposure challenge technological obsolescence stereotypes by venturing into entrepreneurship. Workers with lower digital exposure are often ‘pushed’ into entrepreneurship due to limited employment opportunities. Those with higher digital exposure are better positioned to leverage the benefits of digitalization. This digital exposure effect to “pull” workers into entrepreneurship intensifies with age, challenging stereotypes of technological ineptitude among older workers. Conversely, older entrepreneurs with lower exposure may benefit from workforce training to better adapt to the evolving labor market.

Policy Implications & Recommendations

Emphasize Lifelong Learning and Digital Exposure

• Prioritize digital skills training (such as digital marketing, e-commerce, cyber security, coding) for workers to reduce replacement risks and facilitate entrepreneurship (regardless of their age).
• Encourage continuous and life-long learning to adapt to changing work paradigms and leverage digitalization’s benefits, to upskills or reskill.

Digital Skills Training

• Prioritize training programs, particularly for older workers with low digital exposure to bridge the digital divide and enhance entrepreneurship opportunities because they are the most vulnerable group.
• Provide targeted programs and incentives to upskill older workers and enhance their digital readiness.

Flexible Work Arrangements

• Recognize and support the rise of part-time entrepreneurship and non-traditional work arrangements facilitated by digitalization.
• Promote policies that accommodate flexible work arrangements, reflecting changing work paradigms and leveraging digital exposure.

Support Opportunity Entrepreneurship for Older Workers with High Digital Exposure

• Age strengthens the link between higher digital exposure and opportunity entrepreneurship.[3]
• Policies supporting older workers’ digital skills could enhance opportunity entrepreneurship.

Tailor Policies to Local Economic Conditions

• Consider regional dynamics, such as central city dynamics and regional unemployment rates, in formulating entrepreneurship policies.
• Localized policy formulation can enhance the effectiveness of entrepreneurship support initiatives and unlock regional innovation potential.

Future Research Directions

• Investigate spatial nuances in digital exposure to unlock regional innovation and entrepreneurship potentials varying by different geographic areas with unique local industry mix and market demands.
• Explore the intersection of digital exposure, age, and entrepreneurship in diverse regional contexts to inform targeted policy interventions for various local planning missions and goals.

References

[1] Digitalization involves relying on computers and the internet to conduct business activities.

[2] The definition of “older workers” varies by different studies. The often used definitions include ages 40 (according to the 1967 Age Discrimination in Employment Act), 50 (AARP), 62 (early retirement age), or 65 or 67 (regular retirement age) and above.

[3] Opportunity entrepreneurship can be contrasted with entrepreneurship out of necessity, such as due to unemployment.