The Role of Wealth in the Start-Up Decision of New Self-Employed: Evidence from a Pension Policy Reform

We used administrative micro panel data from the Netherlands to study the wealth effect on the transitions of workers from wage-employment to self-employment. To isolate the causal effect of wealth, we used a pension system reform in 2006 as a quasi-natural experiment. With the onset of the reform, wage-employees born on or after 1 January 1950 faced a substantial reduction of their pension wealth. Our empirical results are robust to the checks on the anticipation effects and the placebo effects, and show that the (pension) wealth change has a significant positive causal effect on the transition into self-employment.