Explaining Transitions into Self-Employment after (Early) Retirement

Abstract

Governments that attempt to extend the working lives of their citizens may consider promoting bridge employment. Self-employment in particular, may be an instrument in postponing the age at which workers finally leave the labour market.

A NIDI panel study among older workers in the Netherlands revealed that one in every three retirees re-entered the labor market after (early) retirement. Post-career transitions into self-employment are increasingly common. In this paper we explore the various trajectories older adults may choose in their pathway into full retirement. How common is the transition into self-employment after (early) retirement? What motives drives this transition? To what extent is the decision to become self-employed determined by the lack of opportunities for paid employment offered by employers. The results of this study do not support this ‘necessity hypothesis’. Instead, the results point in the direction of the ‘opportunity hypothesis’. At least in the period under study, the self-employment option was primarily chosen by retirees with relatively high social capital (wealth & educational attainment) as well as entrepreneurial attitudes (high scores on self-efficacy). The fact that their retirements were overall quite early, but not considered involuntary, suggests that the timing of the decision to retire may be driven by the emergence of new (business) opportunities.

Keywords: bridge employment, self-employment, older workers, senior entrepreneurship, The Netherlands, longitudinal study