Small Business Economics

, Volume 45, Issue 3, pp 561–580 | Cite as

Understanding the decline in self-employment among individuals nearing retirement

  • Bradley T. HeimEmail author


This paper examines the sources of the decline in self-employment among near-retirees over 1994–2012. Using Current Population Survey data, tabulations imply that the decline was driven by an increase in the exit rate to wage and salary employment, a decline in the rate of self-employment among new entrants into this age cohort, and an increase in the share of these new entrants. Multinomial logits suggest that health insurance coverage and after-tax prices of health insurance were significantly associated with these three rates. However, counterfactual simulations suggest that only the changes in after-tax prices of health insurance were found to appreciably influence the trends in these rates, though in the opposite direction of the actual declining trend for the rate of self-employment of new entrants.


Self-employment Retirement Health insurance Taxes Markov chain 

JEL classifications

L26 J68 I13 



I wish to thank Ed Gerrish and LeeKai Lin for excellent research assistance, and Jules Lichtenstein, three anonymous reviewers, Adam Copeland, and participants at the WEAI 89th Annual Conference for helpful advice and comments.


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Copyright information

© Springer Science+Business Media New York 2015

Authors and Affiliations

  1. 1.School of Public and Environmental AffairsIndiana UniversityBloomingtonUSA

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