How earning capacity moderates the age-self-employment relationship

Benjamin Bolger; Frank Crowley; Justin Doran; Nóirín McCarthy; Bernadette Power

doi:10.1108/jsbed-04-2025-0242

How earning capacity moderates the age-self-employment relationship

Cork University Business School

Research output: Contribution to journal › Article › peer-review

Abstract

Purpose This study investigates the role of earnings in the relationship between age and self-employment decisions, which has remained unclear. By bringing together two areas of the self-employment literature, this research demonstrates how self-employment entry occurs differently across age, where the effect of prior employment pay is not consistent. Design/methodology/approach Data from the UK Household Longitudinal Study 2009 to 2020 is used to examine how an individual's prior pay from employment impacts their propensity to enter self-employment through logistical regression methods. Findings Our results suggest that older individuals with higher prior employment pay levels have an increased likelihood of becoming self-employed. By contrast, young individuals are more likely to become self-employed from lower-paid employment. Research limitations/implications Our findings unlock key insights for future research, as we discover that an individual's decision to enter self-employment is influenced by their age in conjunction with their prior earnings from employment. Practical implications The results suggest that financial aid directed to younger individuals may increase self-employment rates, whereas other assistance, such as training courses and network development, is likely to be a more effective policy strategy for older individuals. Originality/value This study bridges two distinct strands in the current literature on self-employment by analysing how both an individual's age and earning capacity determine their likelihood of transitioning from paid employment to self-employment. This offers a new perspective, as these aspects have not been considered in tandem before.

Original language	English
Journal	Journal of Small Business and Enterprise Development
DOIs	https://doi.org/10.1108/jsbed-04-2025-0242
Publication status	Published - 14 Dec 2026

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 8 Decent Work and Economic Growth

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10.1108/jsbed-04-2025-0242

Cite this

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title = "How earning capacity moderates the age-self-employment relationship",

abstract = " Purpose This study investigates the role of earnings in the relationship between age and self-employment decisions, which has remained unclear. By bringing together two areas of the self-employment literature, this research demonstrates how self-employment entry occurs differently across age, where the effect of prior employment pay is not consistent. Design/methodology/approach Data from the UK Household Longitudinal Study 2009 to 2020 is used to examine how an individual's prior pay from employment impacts their propensity to enter self-employment through logistical regression methods. Findings Our results suggest that older individuals with higher prior employment pay levels have an increased likelihood of becoming self-employed. By contrast, young individuals are more likely to become self-employed from lower-paid employment. Research limitations/implications Our findings unlock key insights for future research, as we discover that an individual's decision to enter self-employment is influenced by their age in conjunction with their prior earnings from employment. Practical implications The results suggest that financial aid directed to younger individuals may increase self-employment rates, whereas other assistance, such as training courses and network development, is likely to be a more effective policy strategy for older individuals. Originality/value This study bridges two distinct strands in the current literature on self-employment by analysing how both an individual's age and earning capacity determine their likelihood of transitioning from paid employment to self-employment. This offers a new perspective, as these aspects have not been considered in tandem before. ",

author = "Benjamin Bolger and Frank Crowley and Justin Doran and N{\'o}ir{\'i}n McCarthy and Bernadette Power",

year = "2026",

month = dec,

day = "14",

doi = "10.1108/jsbed-04-2025-0242",

language = "English",

journal = "Journal of Small Business and Enterprise Development",

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T1 - How earning capacity moderates the age-self-employment relationship

AU - Bolger, Benjamin

AU - Crowley, Frank

AU - Doran, Justin

AU - McCarthy, Nóirín

AU - Power, Bernadette

PY - 2026/12/14

Y1 - 2026/12/14

N2 - Purpose This study investigates the role of earnings in the relationship between age and self-employment decisions, which has remained unclear. By bringing together two areas of the self-employment literature, this research demonstrates how self-employment entry occurs differently across age, where the effect of prior employment pay is not consistent. Design/methodology/approach Data from the UK Household Longitudinal Study 2009 to 2020 is used to examine how an individual's prior pay from employment impacts their propensity to enter self-employment through logistical regression methods. Findings Our results suggest that older individuals with higher prior employment pay levels have an increased likelihood of becoming self-employed. By contrast, young individuals are more likely to become self-employed from lower-paid employment. Research limitations/implications Our findings unlock key insights for future research, as we discover that an individual's decision to enter self-employment is influenced by their age in conjunction with their prior earnings from employment. Practical implications The results suggest that financial aid directed to younger individuals may increase self-employment rates, whereas other assistance, such as training courses and network development, is likely to be a more effective policy strategy for older individuals. Originality/value This study bridges two distinct strands in the current literature on self-employment by analysing how both an individual's age and earning capacity determine their likelihood of transitioning from paid employment to self-employment. This offers a new perspective, as these aspects have not been considered in tandem before.

AB - Purpose This study investigates the role of earnings in the relationship between age and self-employment decisions, which has remained unclear. By bringing together two areas of the self-employment literature, this research demonstrates how self-employment entry occurs differently across age, where the effect of prior employment pay is not consistent. Design/methodology/approach Data from the UK Household Longitudinal Study 2009 to 2020 is used to examine how an individual's prior pay from employment impacts their propensity to enter self-employment through logistical regression methods. Findings Our results suggest that older individuals with higher prior employment pay levels have an increased likelihood of becoming self-employed. By contrast, young individuals are more likely to become self-employed from lower-paid employment. Research limitations/implications Our findings unlock key insights for future research, as we discover that an individual's decision to enter self-employment is influenced by their age in conjunction with their prior earnings from employment. Practical implications The results suggest that financial aid directed to younger individuals may increase self-employment rates, whereas other assistance, such as training courses and network development, is likely to be a more effective policy strategy for older individuals. Originality/value This study bridges two distinct strands in the current literature on self-employment by analysing how both an individual's age and earning capacity determine their likelihood of transitioning from paid employment to self-employment. This offers a new perspective, as these aspects have not been considered in tandem before.

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DO - 10.1108/jsbed-04-2025-0242

M3 - Article

SN - 1462-6004

JO - Journal of Small Business and Enterprise Development

JF - Journal of Small Business and Enterprise Development

ER -

How earning capacity moderates the age-self-employment relationship

Abstract

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