Research by IPPR North shows the over-50s are generally less active in the job market in northern England than elsewhere in the UK.

On Saturday, the Yorkshire Post revealed how the region is heading towards a "demographic timebomb" with local authorities and health trusts facing massive cash shortfalls to cope with a rapidly ageing population.

In response to the demographic shift, bosses at regional development agency Yorkshire Forward are urging middle-aged people to become entrepreneurs.

Businesses in the region are also being advised to cast away prejudices about employing older people and look for experience when recruiting.

"With an ageing and declining labour force there is a particular need to put the skills and abilities of older people to better use in northern labour markets," says the IPPR North report, The Northern Economy in the Next Decade.

"This is the category that is the most problematic in the North – the level of inactivity among people aged between 50 and the state pension age is much higher there than the UK average.

"Given this demographic situation, the key opportunity for the North to improve productivity per head is to engage the older generation in different economic activities, including private businesses, as well as to encourage more high-skilled people to move into the region."

The need for more over-50s to be involved in the job market is particularly pressing given new figures which indicate that, by 2030, there will be fewer than three workers for every pensioner living in Yorkshire.

Thea Stein, executive director of economic inclusion at Yorkshire Forward, said: "Over-55s who start up businesses tend to have better survival rates than younger people; they tend to research better, are more experienced and are more risk averse.

"Encouraging that older population to be self-employed and involved in business start-ups is something we are doing through a range of specific projects, like the Older Workers Employment Network in Hull and the East Riding."

Estimates indicate that people aged between 20 and 49 will make up just a third of North Yorkshire's population in 2020.

"To businesses we are saying, 'if your fantasy workforce is aged 25 and all recent graduates, you've got to think again because the pool of people you're going to be drawing from is not that cohort'," Ms Stein said.

"We know a lot of companies are bringing their call centres back to England from overseas and there is a real challenge to convince older people that these are jobs that they can do.

"Another thing for businesses to think about is that the older population is their market; the silver pound is very significant in Yorkshire."

Ms Stein said people considering setting up their own businesses may not even have to leave their homes as internet use becomes more popular.

"There is a lot of interesting research showing that older age groups are fast becoming among the biggest users of the internet," she said. "We want to think about how to exploit these new ways to work with people and to connect them.

"If you look at business start-ups in North Yorkshire, you've got lots of business start-ups that are home-based; I think we will see more people working from home as people really exploit the internet.

"Over-65s in 20 years' time will be very internet savvy, and we've already got broadband internet access across the entire region."

The demographic shift is likely to mean big business for Yorkshire firms in the assistive technology sector, which develop gadgets designed to help vulnerable people live independently in their own homes.

Yorkshire academics are also working in this field through the Advanced Care Technologies Project, a joint scheme involving the Sheffield Institute for Studies on Ageing and Barnsley NHS Foundation Trust.

"The emphasis of modern public policy is that older people should be able to stay in their own homes," Ms Stein said.

"In order to do that we need to get to the level of places like Scandinavia, where large numbers of older people are able to stay in their own homes."