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Pathways to Retirement through Self-Employment

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  • Shanthi Ramnath
  • John B. Shoven
  • Sita Nataraj Slavov

Abstract

We examine the role of self-employment in retirement transitions using a panel of administrative tax data. We find that the hazard of self-employment increases at popular retirement ages associated with Social Security eligibility, particularly for those with greater retirement wealth. Late-career transitions to self-employment are associated with a larger drop in income than similar mid-career transitions. Data from the Health and Retirement Study suggest that hours worked also fall upon switching to self-employment. These results suggest that self-employment at older ages may serve as a “bridge job,” allowing workers to gradually reduce hours and earnings along the pathway to retirement.

Suggested Citation

  • Shanthi Ramnath & John B. Shoven & Sita Nataraj Slavov, 2017. "Pathways to Retirement through Self-Employment," NBER Working Papers 23551, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:23551
    Note: AG PE
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    References listed on IDEAS

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    Cited by:

    1. Mary J. Lopez & Sita Slavov, 2020. "Do immigrants delay retirement and social security claiming?," Applied Economics, Taylor & Francis Journals, vol. 52(10), pages 1105-1123, February.
    2. Abraham, Katharine G. & Hershbein, Brad & Houseman, Susan N., 2021. "Contract work at older ages," Journal of Pension Economics and Finance, Cambridge University Press, vol. 20(3), pages 426-447, July.
    3. Richard Fabling, 2018. "Entrepreneurial beginnings: Transitions to self-employment and the creation of jobs," Working Papers 18_12, Motu Economic and Public Policy Research.
    4. Courtney Coile & Mark Duggan & Audrey Guo, 2021. "To Work for Yourself, for Others, or Not at All? How Disability Benefits Affect the Employment Decisions of Older Veterans," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 40(3), pages 686-714, June.
    5. Ben Brewer & Karen Smith Conway & Jonathan C. Rork, 2022. "Do income tax breaks for the elderly affect economic growth?," Contemporary Economic Policy, Western Economic Association International, vol. 40(1), pages 7-27, January.
    6. Charlene M. Kalenkoski & Sara Helms McCarty, 2021. "In or Out or Somewhere in Between? The Determinants of Gradual Retirement," Journal of Family and Economic Issues, Springer, vol. 42(2), pages 387-394, June.
    7. Nolan, Anne & Barrett, Alan, 2019. "The role of self-employment in Ireland’s older workforce," The Journal of the Economics of Ageing, Elsevier, vol. 14(C).
    8. Teresa H. Bednarczyk & Ilona Skibińska-Fabrowska & Anna Szymańska, 2021. "An Empirical Study on the Financial Preparation for Retirement of the Independent Workers for Profit in Poland," Risks, MDPI, vol. 9(9), pages 1-21, September.

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    More about this item

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J29 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Other

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