Self-Employment Transitions and Health Outcomes in Later Life: Evidence from China

Abstract

Self-employment is a vital alternative to waged employment for older workers. Recent research has shown that employment transitions frequently occur when individuals approach retirement. However, evidence of how older people’s health changes when they switch between self- and waged employment is lacking, particularly outside Western contexts. To address this research gap, we explored the health impact of employment transitions for the older working population in China by hukou (urban or rural household registration status), region, and education. We employed fixed effect models to examine the impact of employment transitions on cognitive, mental, and physical health and life satisfaction drawing on data from four waves (2011, 2013, 2015, and 2018) of the China Health and Retirement Longitudinal Study (N=4,606). Given China’s unique context, we analyzed the results of agricultural and non-agricultural work separately. Individuals transitioning into or remaining in self-employment had lower self-rated health and life satisfaction than those remaining in waged employment. There was no significant difference in cognitive functioning or depressive symptoms. Additionally, those who transitioned from self-employment into waged employment rated their health worse than those who remained in waged employment. The health impacts were more apparent for agricultural than non-agricultural self-employment, particularly for older workers living in urban regions with rural hukou and lower education levels. Most older Chinese transitioning into or staying self-employed are or were pushed into self-employment due to their low human capital and socioeconomic status, which affects their subsequent health. Pension reform and policies supporting older adults to stay in the workforce could help close the economic and health gaps between rural and urban older adults.