Does Working for Oneself, Not Others, Improve Older Adults' Health? An Investigation on Health Impact of Self-Employment

Abstract

This paper examines the health impact of being self-employed versus working for others among older adults (aged 50 ) and its implications. Facing an aging workforce, self-employment at older ages may provide an economic benefit via an alternative to retirement. However, little research has examined the health effects of self-employment in later life. Relying on the latest 7 waves of data from the Health and Retirement Study, this study comprehensively examines health using a 29-item index to measure the impact of self-employment status on changes in older adults' overall health. We conduct a 2-stage generalized panel data instrument variables regression model, with lagged values to control potential endogeneity and simultaneity issues. We find self-employment compared to wage-and-salary jobs result in better health, controlling for job stress and work intensity, cognitive performance, prior health conditions, socioeconomic and demographic factors. This positive self-employment impact stands out in knowledge-based industry sectors. In labor intensive industry sectors such as Durable Goods Manufacturing, self-employed older adults' more gradual retirement seems to result in a health advantage over wage-and-salary employees. Limitations of the study and future research directions are discussed.