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Changing Identity: Retiring from Unemployment

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  • Clemens Hetschko
  • Andreas Knabe
  • Ronnie Schöb

Abstract

Using data from the German Socio-Economic Panel from 1984-2009, we follow persons from their working life into their retirement years and find that, on average, employed people maintain their life satisfaction upon retirement, while long-term unemployed people report a substantial increase in their life satisfaction when they retire. These results are robust to controlling for changes in other life circumstances and suggest that retiring is associated with a switch in the relevant social norms that causes an increase in identity utility for the formerly unemployed. This is supportive of the idea that, by including identity in the utility function, results from the empirical life satisfaction literature can be reconciled with the economic theory of individual utility.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3540.

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Date of creation: 2011
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Handle: RePEc:ces:ceswps:_3540

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Keywords: life satisfaction; retirement; unemployment; identity; social norm;

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References

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  1. Paul Dolan & Daniel Kahneman, 2008. "Interpretations Of Utility And Their Implications For The Valuation Of Health," Economic Journal, Royal Economic Society, vol. 118(525), pages 215-234, 01.
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  25. Nattavudh Powdthavee, 2007. "Are there Geographical Variations in the Psychological Cost of Unemployment in South Africa?," Social Indicators Research, Springer, vol. 80(3), pages 629-652, February.
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Citations

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Cited by:
  1. Hetschko, Clemens & Knabe, Andreas & Schöb, Ronnie, 2014. "Looking back in anger? Retirement and unemployment scarring," Discussion Papers 2014/11, Free University Berlin, School of Business & Economics.
  2. Filges, Trine & Larsen, Mona & Pedersen, Peder J., 2012. "Retirement: Does Individual Unemployment Matter? Evidence from Danish Panel Data 1980–2009," IZA Discussion Papers 6538, Institute for the Study of Labor (IZA).
  3. Ronnie Schöb, 2013. "Unemployment and Identity," CESifo Economic Studies, CESifo, vol. 59(1), pages 149-180, March.
  4. repec:hal:wpaper:halshs-00925542 is not listed on IDEAS
  5. Andrew E. Clark & Conchita D'Ambrosio & Simone Ghislandi, 2014. "Adaptation to Poverty in Long-Run Panel Data," PSE Working Papers halshs-00925542, HAL.
  6. Rackow, Katja & Schupp, Jürgen & Scheve, Christian von, 2012. "Angst und Ärger: Zur Relevanz emotionaler Dimensionen sozialer Ungleichheit," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 392-409.

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