When Americans go into business for themselves later in life, is it because they want to or because they have to? And do the answers differ for men and women, who have different levels of savings, other sources of retirement income, and appetites for risk?
Amid the surge in older Americans becoming entrepreneurs, Angela Curl is probing these questions. An assistant professor at the University of Missouri School of Social Work researching work and retirement, she’s among the first to examine how gender differences motivate older people to choose self-employment. I spoke to her recently about her findings. Edited excerpts of our conversation follow.
You found that men are more risk-tolerant and may choose self-employment in later life at least in part as a result. But older women were more likely to have become self-employed out of necessity, since they were less likely to have a spouse, a pension, or a previous high-paying job.
Lower economic resources seem to suggest self-employment is a necessity more for women than for men. Men are already more likely to take a risk like becoming self-employed, according to results from nearly all previous studies.
You looked at data from a nationally representative sample of Americans over 50 and compared that with data from New Zealand. What was the rate of self-employment for each country?
Men were more likely to be self-employed in each country. In the U.S., it was 32.2 percent of men and 18.5 percent of women. In New Zealand, self-employment was more common, with 39.5 percent of men and 28 percent of women.
Were there factors that seemed to drive self-employment for men vs. women?
For U.S. men, lower occupational status and receiving pensions predicted lower rates of self-employment. However, there were no such effects for U.S. women. Research suggests that women may seek to extend their working career to fulfill work-based ambitions that were disrupted by child bearing and family commitments.
Retirement research shows that women are far less financially prepared for retirement than men and more likely to fall into poverty in their later years. Does that contribute?
Yes. Women may need to work longer to generate sufficient retirement wealth. Many people say they want to work longer, but many of them face age discrimination on the job, and many have been disadvantaged by their age in looking for a new job, so self-employment seems like a good alternative to them.
The men in your study were more likely to have working spouses and have pensions from their jobs. It sounds as if they saw later-life entrepreneurship as an adventure or wealth-generator rather than a financial necessity.
The men also had larger savings to buffer business losses or failures and more opportunities to engage in entrepreneurial ventures.
What other differences did you find?
Women who lived alone were more likely to be self-employed. If they rated their health status better they were also more likely to be self-employed.
Men were more likely to be self-employed if they didn’t have a pension to rely on, but for both genders, having higher wealth but lower income predicted self-employment.
What are the implications of that?
It takes wealth to start a business, and being wealthier probably gives you a different social network and more business opportunities. Also, people accustomed to a higher lifestyle may have to keep working to achieve that if their income drops a lot in retirement.
What kinds of businesses are they starting?
Men are more likely to be self-employed in blue-collar occupations in the labor sector. They’re working as machine operators or technicians. Women are less likely to report businesses in those sectors, probably not surprisingly.