The Opposing Effects of Wealth on Younger and Older Entrepreneurs

Mikhed, Vyacheslav; Raina, Sahil; Scholnick, Barry; d’Astous, Philippe

doi:10.21799/frbp.wp.2025.32

Working Paper

The Opposing Effects of Wealth on Younger and Older Entrepreneurs

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 to 64) to reduce business ownership and growth (as measured by sales, revenue, and employees). In contrast, extra wealth increases younger winners’ (aged 21 to 54) business ownership, but it has no effect on their business growth. The increase in business activity of a young winner does not offset the negative growth for an older winner, which may hurt economic growth.

JEL Classification: G5; G51; J22; L26;

https://doi.org/10.21799/frbp.wp.2025.32