In the United States, about one in four workers aged 51 and above are self-employed. Many made the transition to self-employment after age 50, often as part of the process of retirement. Similar patterns exist among older workers in the United Kingdom. Because self-employment rates rise with age, the importance of self-employment is increasing as populations age in the two countries. Yet, our understanding of why a worker transitions to self-employment at this stage in life and the implications for retirement income security is limited. The main goals of this proposed research are to use comparable panel data for the United States and the United Kingdom to study labor force transitions after age 50 between wage and salary work and self-employment, transitions to and from retirement from either employment class, and the implications of class of worker and labor force transitions for retirement income security. We will develop and estimate a unified model of labor force transitions accounting for joint transitions by married couples and study, among other characteristics, the effects of health and wealth shocks on these transitions. We will analyze the relative adequacy of retirement wealth for self-employed and wage and salary workers by analyzing the distribution of wealth and lifetime earnings, asset diversification, and access to health insurance. We will employ eight waves of longitudinal data particularly well suited for this study from the U.S. Health and Retirement Study and at least two waves of data from the English Longitudinal Survey of Ageing. The results will provide a more complete picture of labor force transitions around retirement, and the retirement wealth and income security of the self-employed, an important yet understudied group of workers. Comparable cross-national data will also allow us to take advantage of the variation within and between countries in pension systems, health insurance, and access to capital in order to understand the incentives that draw workers to and from self-employment later in life.

Agency
National Institute of Health (NIH)
Institute
National Institute on Aging (NIA)
Type
Research Project (R01)
Project #
5R01AG025552-02
Application #
7125993
Study Section
Social Sciences and Population Studies Study Section (SSPS)
Program Officer
Patmios, Georgeanne E
Project Start
2005-09-30
Project End
2009-07-31
Budget Start
2006-08-01
Budget End
2007-07-31
Support Year
2
Fiscal Year
2006
Total Cost
$148,475
Indirect Cost
Name
Rand Corporation
Department
Type
DUNS #
006914071
City
Santa Monica
State
CA
Country
United States
Zip Code
90401
Maestas, Nicole; Zissimopoulos, Julie (2010) How Longer Work Lives Ease the Crunch of Population Aging. J Econ Perspect 24:139-160
Zissimopoulos, Julie M; Karoly, Lynn A; RAND Corporation (2009) Labor-Force Dynamics at Older Ages: Movements Into Self-Employment for Workers and Nonworkers. Res Aging 31:89-111