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Labour Market Decisions of the Self-Employed in the Netherlands at the Statutory Retirement Age

Amparo Nagore García Nagore García, Mariacristina Rossi () and Arthur Van Soest ()
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Amparo Nagore García Nagore García: LISER
Arthur Van Soest: Tilburg University

No 182, CeRP Working Papers from Center for Research on Pensions and Welfare Policies, Turin (Italy)

Abstract: We investigate retirement decisions of the self-employed in the Netherlands using administrative data. We focus on the time period around which individuals reach the statutory retirement age (SRA, 65 years in most cases). After the statutory retirement age, each Dutch resident receives the Old Age State Pension annuity (AOW), providing an income at the subsistence level. Both the timing and the magnitude of this state pension are well known in advance. According to a standard leisure/consumption trade-off life cycle model, receiving AOW should therefore have no impact on labour supply choices. While employees often face the demand side restriction of mandatory retirement, this does not apply to the self-employed. We investigate whether retirement and earnings of the selView postf-employed change at the SRA and whether any such changes vary with, e.g., the level of financial wealth. We find a peak in retirement when self-employed reach the SRA. The evidence suggests that the benchmark of retiring at 65 is acting as a driver, due to behavioural features like anchoring or a social norm.

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Date: 2018-06
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Working Paper: Labour Market Decisions of the Self-Employed in the Netherlands at the Statutory Retirement Age (2018) Downloads
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