Look before you leap: Earnings gaps and elderly self-employment

Pankaj C. Patel

Journal of Business Research, 2025, vol. 189, issue C

Abstract: Drawing on lifespan theory and the entrepreneurship earnings puzzle, we hypothesize that the earnings gap between self-employed and employed individuals exacerbates with age. However, we also posit that cognitive ability and the utilization of skills at work could help close this earnings gap. We conducted four studies with a total of nine samples to test these hypotheses. Our findings, however, are not promising. Although older individuals are more likely to be self-employed, the earnings gap between self-employed and employed individuals increases linearly with age, but not non-linearly. Moreover, neither those with higher cognitive ability nor those with more opportunities to apply skills at work can close the earnings gap. These findings highlight the limited economic benefits of self-employment for older individuals.

Keywords: Elderly entrepreneurship; Earnings gap; Cognition; Skills at work (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:189:y:2025:i:c:s014829632400585x

DOI: 10.1016/j.jbusres.2024.115081

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