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

Amparo Nagore Garcia (), Mariacristina Rossi () and Arthur van Soest ()
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Amparo Nagore Garcia: Luxembourg Institute of Socio-economic Research - LISER, Luxembourg

No 57, Working papers from Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino

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 self-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.

Keywords: Life cycle model; retirement decision; reference point; social norm. (search for similar items in EconPapers)
JEL-codes: D91 D31 J26 L26 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2018-06
New Economics Papers: this item is included in nep-age, nep-eur and nep-lma
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http://www.bemservizi.unito.it/repec/tur/wpapnw/m57.pdf First version, 2018 (application/pdf)

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