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Stress and retirement

Author

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  • Fonseca, Raquel
  • Moro-Egido, Ana I.
  • Morin, Hugo

Abstract

This paper examines the bidirectional causal relationship between retirement and stress. We use data from the PSID for the period 2007–2015. By employing a simultaneous equations approach, we find that experiencing stress increases the likelihood of retirement by approximately 34.8 percentage points, whereas retirement lowers the probability of feeling stress by 19.6 percentage points. We obtain consistent results when we disaggregate data according to various individual characteristics, including gender, occupation, wealth, and ethnicity. To determine actual retirement age, we use official retirement ages and a proxy of health stock as instruments, while lagged physical activity levels serve as a non-linear instrument for perceived stress. Our findings are particularly relevant in terms of policy, and further research is needed to assess the impact of physical activity on economic and well-being outcomes for older individuals.

Suggested Citation

  • Fonseca, Raquel & Moro-Egido, Ana I. & Morin, Hugo, 2024. "Stress and retirement," Economic Modelling, Elsevier, vol. 131(C).
    • Handle: RePEc:eee:ecmode:v:131:y:2024:i:c:s0264999323004297
    DOI: 10.1016/j.econmod.2023.106617
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    Keywords

    Stress; Retirement; Physical activity; Simultaneous equation models;
    All these keywords.

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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