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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. Andrew E. Clark & Ed Diener & Yannis Georgellis & Richard E. Lucas, 2007. "Lags and Leads in Life Satisfaction: A Test of the Baseline Hypothesis," CEP Discussion Papers dp0836, Centre for Economic Performance, LSE.
  2. Bonsang, Eric & Klein, Tobias J., 2012. "Retirement and subjective well-being," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 83(3), pages 311-329.
  3. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2008. "Relative Income, Happiness, and Utility: An Explanation for the Easterlin Paradox and Other Puzzles," Journal of Economic Literature, American Economic Association, vol. 46(1), pages 95-144, March.
  4. Andrew E. Clark & Yarine Fawaz, 2009. "Valuing Jobs Via Retirement: European Evidence," National Institute Economic Review, National Institute of Economic and Social Research, National Institute of Economic and Social Research, vol. 209(1), pages 88-103, July.
  5. Andrew E. Clark & Yannis Georgellis, 2002. "Unemployment Alters the Set-Point for Life Satisfaction," Economics and Finance Discussion Papers, Economics and Finance Section, School of Social Sciences, Brunel University 02-16, Economics and Finance Section, School of Social Sciences, Brunel University.
  6. Michael Shields & Stephen Wheatley Price & Mark Wooden, 2009. "Life satisfaction and the economic and social characteristics of neighbourhoods," Journal of Population Economics, Springer, Springer, vol. 22(2), pages 421-443, April.
  7. Andreas Knabe & Steffen Rätzel & Ronnie Schöb & Joachim Weimann, 2009. "Dissatisfied with Life, but Having a Good Day: Time-Use and Well-Being of the Unemployed," CESifo Working Paper Series 2604, CESifo Group Munich.
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  12. Michael A. Shields & Stephen Wheatley Price, 2005. "Exploring the economic and social determinants of psychological well-being and perceived social support in England," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 168(3), pages 513-537.
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  20. George A. Akerlof & Rachel E. Kranton, 2000. "Economics And Identity," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 115(3), pages 715-753, August.
  21. Andreas Knabe & Steffen Rätzel, 2008. "Scarring or Scaring? The Psychological Impact of Past Unemployment and Future Unemployment Risk," CESifo Working Paper Series 2457, CESifo Group Munich.
  22. Clark, Andrew E & Georgellis, Yannis & Sanfey, Peter, 2001. "Scarring: The Psychological Impact of Past Unemployment," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 68(270), pages 221-41, May.
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Citations

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Cited by:
  1. repec:hal:wpaper:halshs-00925542 is not listed on IDEAS
  2. Clemens Hetschko & Andreas Knabe & Ronnie Schöb, 2014. "Looking Back in Anger? Retirement and Unemployment Scarring," CESifo Working Paper Series 4784, CESifo Group Munich.
  3. Andrew E. Clark & Conchita D'Ambrosio & Simone Ghislandi, 2014. "Adaptation to Poverty in Long-Run Panel Data," PSE Working Papers halshs-00925542, HAL.
  4. Ronnie Schöb, 2012. "Unemployment and Identity," CESifo Working Paper Series 3991, CESifo Group Munich.
  5. 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.
  6. 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).

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