as of age 60, reflecting that the self-employed are more likely to stay in the labor market, whereas employees, at least from the formal sector, retire.<sup>30</sup> In HICs, self-employment can represent “opportunity” entrepreneurship, a desire to use experience to run a business or lead a more flexible working life. In the United States, the rate of new entrepreneurs is significantly higher in the age group 55-64 than in the age group 20-34 (0.37 vs 0.23 percent). The share of older adults among new entrepreneurs also increased from 15 percent in 1996 to 26 percent in 2018, and older adults are more likely than other age groups to be opportunity driven.<sup>31</sup> However, higher rates of selfemployment among older workers in L/MICs often signal “push factors,” such as lack of wage-work opportunities, with higher informality and overall more precarious employment. In Thailand, for example, informality rates are below 50 percent for workers aged 35-44, but they are nearly 80 percent for those aged 55-64 and over 90 percent for workers aged 65 or more.<sup>32</sup>

**Earnings generally increase with age, all else equal, but patterns vary and may depend on age cohort**

**characteristics** . A recent global study finds that returns to work experience are significant, at around 2 percent globally, and that education cannot easily substitute for experience. There is significant variation across countries, however. First, as mentioned above, there are higher returns to experience for workers in HICs compared to L/MICs. The authors hypothesize that this gap occurs as workers in HICs are more likely to be able to accumulate human capital over time; however, the higher returns could also reflect more access to formal and regulated employment with automatic wage increases that are unrelated to human capital or productivity, or to a higher likelihood of working in firms that are richer in physical capital which can also boost productivity among complementary factors of production. Second, in economies transitioning out of state-led economic systems (former communist economies), skill sets have become obsolete more rapidly than in other countries, and so returns to experience have been lower for specific older cohorts.<sup>33</sup>

**In advanced economies, the labor market participation of older workers has increased in the past few decades.** In 1996, the average worker in an OECD country could expect to exit the labor force at approximately 62 years of age; in 2016, the age of exit had increased by two years, to 64.<sup>34</sup> Between 2002 and 2017, the participation rate for workers between 55 and 74 years increased by 9 percentage points across OECD countries, reversing a decline that had taken place since the 1970s.<sup>35</sup> These trends have occurred across OECD countries, across genders, and across socioeconomic groups.

**In contrast to trends over the past 20 years, the COVID-19 pandemic has resulted in a significant withdrawal of older workers from the labor market, however.** Data from Australia, Austria, China, and the United Kingdom show that older workers were worse hit in the labor market than younger workers by the COVID-19 pandemic, both in terms of quality of work, and in loss of work.<sup>36</sup> In the United Kingdom and the United States, the largest cuts in total employment were due to older workers (55 and over) who dropped out of the labor market during the height of the pandemic. Many of these workers have not (yet) returned to work and may never do so - once out of the labor force, older

> 30 World Bank 2016.

> 31 Farlie et al. 2019.

> 32 World Bank 2021b.

> 33 Jedwab et al. 2021. Chernina and Gimpelson (2022) show, for the Russian Federation, that when time, cohort and experience effects are separated, the cohort and experience factors work in opposite directions, reflecting the massive depreciation of skills.

> 34 Boissonneault et al. 2020.

> 35 Geppert et al. 2019.

> 36 Pit et al. 2021.

10