Opportunity or Necessity? Disaggregating Self-Employment and Entry at Older Ages

Bridging the literatures on entrepreneurship and the aging workforce, we study the factors, particularly job loss, wealth, education, and risk aversion, associated with entry into self-employment at older ages using a multinomial logit hazard model. Using the Health and Retirement Study, we disaggregate self-employment by defining four types through an interaction along two scopes: one that divides along those with supervisory responsibilities or business asset ownership and the other divided into so-called “knowledge” and “non-knowledge” occupations. We find that job loss shows a strong association with entry into self-employment, particularly with less desirable forms of self-employment. In addition, we show that there are large differences between individuals in these alternative measures of self-employment and that there are distinctive factors that influence entry into these types. Additionally, we show that there are some differences in the factors affecting men’s and women’s entry into self-employment.