Working Paper: NBER ID: w26612
Authors: Katharine G. Abraham; Brad Hershbein; Susan Houseman
Abstract: The share of workers who are self-employed rises markedly with age. Given policy concerns about inadequate retirement savings, especially among those with lower education, and the resulting interest in encouraging employment at older ages, it is important to understand the role that self-employment arrangements play in facilitating work among seniors. New data from a survey module fielded on a Gallup telephone survey distinguish independent contractor work from other self-employment and provide information on informal and online platform work. The Gallup data show that, especially after accounting for individuals who are miscoded as employees, self-employment is even more prevalent at older ages than suggested by existing data. Work as an independent contractor is the most common type of self-employment. Roughly one-quarter of independent contractors age 50 and older work for a former employer. At older ages, self-employment generally—and work as an independent contractor specifically—is more common among the highly educated, accounting for much of the difference in employment rates across education groups. We provide suggestive evidence that differences in opportunities for independent contractor work play an important role in the lower employment rates of less-educated older adults.
Keywords: self-employment; independent contractor; older workers; employment rates; education
JEL Codes: J26; J41; J46
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| age (J14) | self-employment (L26) |
| higher education (I23) | independent contractor work (M55) |
| opportunities for independent contractor work (M55) | employment rates of less educated older adults (J26) |
| age 50 and older (J14) | self-employment prevalence (J23) |
| independent contractors aged 50 and older (J14) | work for a former employer (J63) |
| financial necessity (G50) | remaining in the workforce (J29) |
| prioritizing staying active (I19) | remaining in the workforce (J29) |
| connecting with others (Z13) | remaining in the workforce (J29) |