Retirement Transitions of the Self-Employed in the United States and England

Julie M. Zissimopoulos, RAND
Lynn Karoly, RAND
Nicole Maestas, RAND

Motivated by high rates of self-employment among older workers, we examine how public and private pension and health insurance systems affect the retirement transitions of self-employed older workers compared to wage and salary workers using longitudinal data from the U.S. Health and Retirement Study and the English Longitudinal Survey of Ageing. These panel data have the advantage of collecting comparable demographic, economic, and labor market data on workers in the two countries and allow us to exploit cross-national variation in pension and health insurance systems. We find evidence that workers in the two countries respond strongly to incentives provided by key retirement ages in the public system and in private defined-benefit pensions. Health insurance coverage is also important in the United States for understanding differences in the probability a self-employed worker and a wage and salary worker exit the labor force.