Push or Pull: What Explains Growing Entrepreneurship Among Older Households?

26 Pages Posted: 1 Dec 2015

See all articles by Christian E. Weller

Christian E. Weller

University of Massachusetts Boston - Department of Public Policy and Public Affairs; University of Massachusetts Boston - Gerontology Institute; Political Economy Research Institute

Jeffrey B. Wenger

RAND Corporation; American University - School of Public Affairs

Benyamin Lichtenstein

University of Massachusetts Boston

Carolyn Arcand

University of New Hampshire

Date Written: November 30, 2015

Abstract

Older households need to save more money for retirement, possibly by working longer. But, the same labor market pressures that have made it harder for people to save, such as increasingly unstable labor markets, have also made it more difficult for people to work longer as wage and salary employees. Self-employment hence may have become an increasingly attractive alternative option for older households. Entrepreneurship among older households has indeed grown faster than wage and salary employment, especially since the late 1990s. But, this growth, rather than reflecting rising economic pressures, may have been the result of growing financial strengths – fewer financial constraints and more access to income diversification through capital income from rising wealth. Our empirical analysis finds little support for the hypothesis that growing economic pressures have contributed to increasing entrepreneurship. Instead, our results suggest that the growth of older entrepreneurship is coincident with increasing access to income diversification, especially from dividend and interest income. We also find some tentative evidence that access to Social Security and other annuity benefits increasingly correlate with self-employment. Greater access to interest and dividend income follows in part from more wealth and improved access to Social Security may reflect relatively strong labor market experience in the past.

Suggested Citation

Weller, Christian E. and Wenger, Jeffrey B. and Lichtenstein, Benyamin and Arcand, Carolyn, Push or Pull: What Explains Growing Entrepreneurship Among Older Households? (November 30, 2015). Available at SSRN: https://ssrn.com/abstract=2697091 or http://dx.doi.org/10.2139/ssrn.2697091

Christian E. Weller (Contact Author)

University of Massachusetts Boston - Department of Public Policy and Public Affairs ( email )

McCormack Graduate School
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HOME PAGE: http://blog.umb.edu/christianweller

University of Massachusetts Boston - Gerontology Institute ( email )

100 Morrissey Boulevard
Boston, MA 02125-3393
United States

Political Economy Research Institute ( email )

Amherst, MA
United States

Jeffrey B. Wenger

RAND Corporation ( email )

1776 Main Street
Santa Monica, CA
United States
310 393 0411 (Phone)

American University - School of Public Affairs ( email )

Washington, DC 20016
United States

Benyamin Lichtenstein

University of Massachusetts Boston ( email )

100 Morrissey Blvd
Boston, MA 02125
United States

Carolyn Arcand

University of New Hampshire ( email )

15 College Road
Durham, NH 03824
United States

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