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A Study on Middle and Old-aged Self-employed Workers
A Study on Middle and Old-aged Self-employed Workers
  • Table of Contents

    Chapter 1. Introduction (Seung-Yeol Yee)

    Chapter 2. Labor Market Status for Middle and Old-aged Self-employed Workers (Seung-Yeol Yee)

    Chapter 3. Labor Mobility of Middle and Old-aged Workers and Income of Self-employed Workers (Yeong Jeong Son)

    Chapter 4. Business Sustenance and Activities of Middle and Old-aged Self-employed Workers (Seung-Yeol Yee)

    Chapter 5. Conclusion (Seung-Yeol Yee)

     

  • SUMMARY

    This study analyzes middle and old-aged self-employed workers since this age group comprises a major part of self-employed labor market. The aim is to identify characteristics of middle and old-aged self-employed workers; their level of economic activities, living standard, and income, as well as determinants for the above characteristics; and the attributes of middle and old-aged workers who leave the self-employed labor market. The subject of this study is middle and old-aged people aged 45~64.

    Survey of economically active population found that there are 4,895,000 self-employed workers as of 2017. 1,609,000 of those have employees and 3,286,000 don’t. Of the 52.6% of all self-employed workers that are aged 50 or above, 46.8% have employees, and 55.4% do not have employees.

    This study examined the route of entrance into self-employed labor market for middle and old-aged people, their attributes, and determinants of their income and living standard as self-employed workers. Group-based trajectory analysis was used to estimate and categorize the mobility trajectory of middle and old-aged workers aged 45~65 in the labor market based on Korea Labor and Income Panel Study data in Year 1~19 (1998~2016). It showed that the labor mobility of this demographic can be categorized into the eight categories of ① labor market withdrawers (12.2%), ② late-stage self-employed market entrants (4.3%), ③ converted self-employed workers (8.9%), ④ continuous self-employed workers (41.9%), ⑤ converted regular workers (6.9%), ⑥ retired irregular workers (10.4%), ⑦ retired regular workers (5.0%), and ⑧ continuous regular workers (10.4%). It was found that gender, education, and health were the personal attributes with significant impact on which category an individual belongs to. Comparison of the income level among these eight categories showed that the income of middle and old-aged self-employed workers—or those who belong to the categories of late-stage self-employed market entrants, converted self-employed workers, and continuous self-employed persons—was relatively lower than that of regular paid workers—or those who belong to continuous regular workers and retired regular workers. There was also a disparity in the level of consumption between the two groups, but it was not as big as the income disparity. Another analysis was carried out in order to explore the impact of choosing self-employment on household income and expenditure of middle and old-aged population by comparing those who belong to self-employment categories versus the category of continuous regular workers. It was found that those who belong to self-employment categories had 10~25% lower income and 5~10% lower expenditure than those who belong to the category of continuous regular workers. Job satisfaction was also lower in the former group.

    Next, Korea Labor and Income Panel Study data in Year 1~20 was analyzed in order to predict factors that influence the duration of self-employed business using Cox’s proportional hazard model. It showed that the hazard rate for closing the business was higher among those who started the business at an older age and was particularly high for those who started the business at 45 years of age or older. Also, the hazard rate was high if the person had a higher level of educational background or skills than required by the job. This result was statistically significant among the baby boomer generation and men in particular.

    Then, business performance was compared in relation to the age of starting the business based on the results of the Korea Labor Institute’s survey of self-employed business activities in June 2018. Tobit model was used with consideration for endogeneity issues for estimation, and dependent variables in business performance were defined as revenue and operating profit. The results showed that self-employed workers who were aged 45 or above when starting the business had a relatively lower revenue. More than five years of experience as wage workers had a coefficient estimation with a negative (-) value but there was no statistical significance. It was also found that the higher the revenue (estimation), the higher the operating profit. In the case that the person was aged 45 or above when starting the business, the coefficient estimation had a negative (-) value but there was no statistical significance. However, those who had more than five years of experience as wage workers had a coefficient estimation with a negative (-) value that was statistically significant.

    The above analysis results indicate that there is dynamic labor mobility among middle and old-aged people and that the process of labor mobility can be categorized into various types. The level of income and consumption was lower among middle and old-aged people who have continued to work in self-employment or who converted from wage labor to self-employment compared to those who have continued to work as regular wage workers or those who retired as regular workers. This implies the policy need for increasing profitability of self-employed workers in middle and old age groups and securing them with stable retirement income sources. Furthermore, it was found that those who wish to start their own business at the latter stage of life cannot be guaranteed to be competitive unless they have strong factors of production such as technology and capital, and thus it is not easy to sustain the business.

    Lastly, below are some of the policy challenges for supporting middle and old-aged self-employed workers. Firstly, there must be stronger policy support for middle and old-aged workers to help them stay in paid labor for longer. In other words, there must be policy improvements to maintain the employment of middle and old-aged workers. Secondly, limitations of existing policies for small enterprises and self-employed workers must be re-examined and addressed in order to ensure effectiveness of newly established support policies. Thirdly, in recognition of the fact that self-employed workers in middle and old age groups have less opportunities to recover from their failures compared to their counterparts in younger age groups, there should be policy support to increase their coverage in social safety net. Fourthly, female self-employed workers, especially those in middle and old age groups, require special policy attention. There are quite a number of women becoming self-employed without sufficient job experience due to lack of retirement income, and there must be targeted policies for them. Lastly, there must be regular surveys of self-employed workers. There is less statistical data on self-employed workers than that on wage workers and policies for self-employed workers should be developed based on in-depth analysis of more advanced statistics on this group.

     

Seung-Yeol Yee's other publications : 22
{Research Series} posts
No Title Author Date Attach
22 Freelance, the Job of the Future (I): Content Creators Seung-Yeol Yee, Yong-Kwan Lee, Sangkyu Lee December 28, 2018 Freelance, the Job of the Future (I): Content Creators
21 A Study on Middle and Old-aged Self-employed Workers Seung-Yeol Yee, Yeong Jeong Son December 28, 2018 A Study on Middle and Old-aged Self-employed Workers
20 Old-Age Pension Beneficiaries: Labor Supply and Policy Tasks Seung-Yeol Yee December 29, 2017 Old-Age Pension Beneficiaries: Labor Supply and Policy Tasks
19 Comprehensive Evaluation of the Youth Labor Market Policy: Literature Review Seung-Yeol Yee, Se-Um Kim, Jin-Young Kim, Jae Min Seong, Sun Jung Oh, Min-Ki Hong December 29, 2017 Comprehensive Evaluation of the Youth Labor Market Policy: Literature Review
18 Status and Policy Challenges of Injured Workers: Return-to-Work After a Workplace Injury Seung-Yeol Yee, Seungwook Lee December 30, 2016 Status and Policy Challenges of Injured Workers: Return-to-Work After a Workplace Injury
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