Retirement of the self-employed in the Netherlands


We investigate retirement decisions of the self-employed in the Netherlands using administrative data focusing on individuals around 65, the state pension age, after which each Dutch resident receives the Old Age State Pension annuity. Since the eligibility age and the magnitude of this state pension are known well in advance, we expect to find no impact on labor supply choices, unless individuals face liquidity constraints. We investigate whether this is the case, by looking at retirement and changes in earnings of the self-employed around age 65. We find a peak in retirement when self-employed reach the state pension age, which is unlikely to be due to liquidity constraints but might be explained by behavioral features.

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  1. 1.

    See Table 9 in the appendix for the evolution of the SPA in the period under study.

  2. 2.

    The partner allowance was introduced in 1985 and was discontinued on April 1, 2015 for new AOW pensioners.

  3. 3.

    They may also receive income from other sources, such as wages as an employee.

  4. 4.

    We also estimated all models after dropping all observations with these alternative exits, instead of treating them as right-censored observations. The results are very similar and the qualitative conclusions all remain the same.

  5. 5.

    Entrepreneurs are individuals whose main activity is managing their own business, with employees or not. The legal identity of the business is not separated from the owner’s legal identity (unincorporated business). The legal form may be sole trader, general partnership, or ordinary partnership.

  6. 6.

    The unmarried group includes never married, divorced, and widowed.

  7. 7.

    We consider pure entrepreneurs, those with no or a very small occupational pension (estimated yearly annuity lower than 1500 €). This information comes from Pensioenaanspraken.

  8. 8.

    The selected dataset represents 7% of self-employed (excluding directors).

  9. 9.

    We use financial wealth net of debt in our benchmark model. Financial wealth contains total household financial assets (savings, bonds and shares), not including pension wealth (public or private). Financial wealth net of debt is equal to total household financial assets minus financial debts (excluding mortgage on the own house).

  10. 10.

    Negative profits are discarded since they do not say anything about work effort.

  11. 11.

    A similar pattern is observed across the wealth distribution (not shown), though profits for the richest groups show a more pronounced decrease after reaching the SPA.

  12. 12.

    Unfortunately, we cannot estimate duration models because we have no information on tenure.

  13. 13.

    Since time variation in the data is limited we cannot estimate fixed effects models.

  14. 14.

    SPAb is defined as 1{age = SPA} and SPAb2 defined as 1{age > SPA}.

  15. 15.

    In the benchmark model, financial wealth is net of debt.

  16. 16.

    In the benchmark model, financial wealth is net of debt. The model of profits fits better when we include financial wealth in quartiles instead of in quintiles.

  17. 17.

    For self-employed we cannot control by business wealth, tenure, or number of employees. We include a dummy entrepreneur that takes value 1 if the individual is entrepreneur.

  18. 18.

    Selin (2012) finds that pension deductions play an important role for promoting pension savings among self-employed in Sweden.


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The authors thank two anonymous reviewers, discussants Alain Jousten, Pieter Bakx, Rik Dillingh, conference participants in the Netspar International Pension Workshop 2018, Netspar Pension day 2017, Public Economic Conference in Valencia, ESPE Conference 2018 in Antwerp, EALE Conference 2018 in Lyon and seminar participants at LISER, CPB and University of Valencia. The authors also thank CBS, Marike Knoef, Raun van Ooijen and Jochem de Bresser for their help in understanding the dataset.

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Correspondence to Mariacristina Rossi.

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Table 9 Evolution of the state pension age 2008–2015
Table 10 AOW pension amount by partnership status. As of July 2016
Table 11 Definition of explanatory variables

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Nagore García, A., Rossi, M. & van Soest, A. Retirement of the self-employed in the Netherlands. Small Bus Econ 56, 385–402 (2021).

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  • Life cycle model
  • Reference point
  • Social norm

JEL classification

  • J26
  • L26
  • D15
  • D31
  • D91