How does self‐employment affect pension income? A comparative analysis of European welfare states

Abstract

The characteristics of self‐employment in Europe have changed profoundly in the last decades. The share of solo self‐employment has grown and individuals combine more frequently dependent employment with self‐employment at the same time, or more often switch between dependent employment and self‐employment. These developments heavily affect the pensions of the self‐employed and therefore present a challenge for the old‐age security systems of European welfare states. So far, there has been little comparative research on how periods of self‐employment in the working career affect pension income in different European welfare states and how this is linked to the institutional design of pension systems. The paper contributes to filling this research gap by investigating the effect of self‐employment in the working career on individuals' pension income in 11 European countries. The findings show that self‐employment has a negative effect on total pensions of men and women. However, country differences are not significant in men, while in women only in the case of Poland and Belgium are there significant but contradictory effects of the share of self‐employment in the working career on total pensions. These effects are due to pension regulations concerning the contribution and benefit calculation rules for self‐employed persons.

Socially stratified associations between self‐employment and health among Chilean older people

“…Chile’s population is rapidly ageing, and a significant and growing number of individuals carry on working in later life despite few institutional incentives to postpone retirement. The study benefits theoretically from combining stratification and life course perspectives (Brown et al., 2016; Höppner, 2021; Moulton & Scott, 2016).…”

“…However, studies have also stressed the multiple disadvantages of later life self-employment when compared to salaried jobs. Disadvantages such as informality (Curran & Blackburn, 2001), financial precarity (Platman, 2003(Platman, , 2004a(Platman, , 2004b, involuntary or forced work (Hershey et al, 2017), higher pension insecurity due to the absence of adequate policies targeting the self-employed (Damman & van Solinge, 2018;Höppner, 2021) and recurrent lack of experience to face the challenges of self-employment (Lewis & Walker, 2011), all set self-employment as a relatively worse-off position when compared to dependent employment.…”

“…But other individual‐level characteristics are relevant as well. For example, women (Höppner, 2021; Saridakis et al., 2014; Tomlinson & Colgan, 2014), lower‐educated people (Cullati, 2015; von Bonsdorff et al., 2017), individuals with small social networks (Franke, 2015), people with unstable working histories across adulthood (Hoven et al., 2018) and individuals with strong, persistent family care‐giving burdens (Halvorsen & Morrow‐Howell, 2017; Raymo et al., 2004) are more likely to engage in disadvantaged forms of self‐employment (Moulton & Scott, 2016). We therefore expect the association between self‐employment and health to vary across socially stratified groups.…”

Adulthood Employment Trajectories and Later Life Mental Health before and after the Onset of the COVID-19 Pandemic

“…The regression models in Appendix D indicate, nevertheless, that being in full-time self-employed formal (Type 5) and informal (Type 3) work is associated with poorer mental health than formal full-time dependent employment. In a context such as that in Chile, where self-employment is particularly precarious, higher pension insecurity due to the absence of adequate policies targeting the self-employed [ 40 ] might explain why self-employment is a relatively worse-off position for mental health outcomes when compared with formal dependent employment. Additionally, recurrent lack of experience and lack of risk tolerance to face the challenges of self-employment in old age [ 41 ] might also contribute to this relationship.…”

Studying the politics of pension reforms and their social consequences

“…Over the last few years, a growing strand of research at the interface of social policy analysis and sociology has studied the relationship of pension policies and financial wellbeing in retirement from a life-course perspective, linking developments in the employment and fertility history to pensions and later-life inequalities. This research mostly takes an empirical quantitative approach and uses detailed life-course information from country-specific or comparative datasets in small-N (e.g., Sefton et al, 2011;Fasang et al, 2013) or large-N studies (e.g., Höppner, 2021;Möhring, 2021). The former type of studies also makes use of rich register data (Riekhoff & Järnefelt, 2018;Möhring & Weiland, 2021).…”