Pathways to Retirement through Self-Employment
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.
John B. Shoven and Sita Nataraj Slavov were supported by Sloan Foundation grant number 2015-14152. We thank Kyung Min Lee and Chanup Jeung for excellent research assistance. We thank Gila Bronshtein, Arcenis Rojas, Natalya Shelkova, and participants at the 2016 Working Longer conference at the Stanford Institute for Economic Policy Research and George Mason’s Schar School brown bag series for helpful comments. The findings and conclusions expressed are solely those of the author(s) and do not represent the views of the U.S. Department of the Treasury, the Sloan Foundation, or the NBER. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Sita Nataraj Slavov
In addition to my compensation from George Mason University, during the past three years, I have received compensation from Stanford University, the American Enterprise Institute, the National Bureau of Economic Research, and the Mercatus Center. During the past three years, my research has been supported by grants from the Sloan Foundation, the National Institute on Aging, the Social Security Administration, the Koch Foundation, the Mercatus Center, and Stanford University.