The Effect of Retirement Incentives on Retirement Behavior: Evidence from the Self-Employed in the United States and England

Authors

• Julie Zissimopoulos
• Nicole Maestas
• Lynn Karoly

Abstract

In this paper, we examine how public and private pension and health insurance systems affect the retirement transitions. In many countries, public and private pension eligibility, as well as access to health insurance varies between self-employed and wage and salary workers, and these differences are likely to cause differential retirement patterns both within and across countries. We use the variation in these institutional features within and across the United States and England to analyze retirement patterns. Based on longitudinal data from the Health and Retirement Study (HRS) in the United States and the English Longitudinal Survey of Ageing (ELSA) we find that the higher labor force exit rate of wage and salary workers compared to self-employed workers is due to defined benefit pension incentives created by the public and private pension systems. Higher rates of labor force exit at ages 55 and older in England compared to the United States are due in part to the availability of publicly provided health insurance.

Key Findings

• The higher labor force exit rate of wage and salary workers compared to self-employed workers is due to defined benefit pension incentives created by the public and private pension systems.
• Higher rates of labor force exit at ages 55 and older in England compared to the United States are due in part to the availability of publicly provided health insurance.

 

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Project

• UM07-18: A Cross-National Comparison of Self-employment Dynamics at Older Ages

Paper ID

WP 2007-155

Publication Type

Working Paper

Publication Year

2007