NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Pathways to Retirement through Self-Employment

Shanthi Ramnath, John B. Shoven, Sita Nataraj Slavov

NBER Working Paper No. 23551
Issued in June 2017
NBER Program(s):Aging, Public Economics

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.

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Document Object Identifier (DOI): 10.3386/w23551

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