How Stressful is Retirement? New Evidence from a Longitudinal, Fixed-effects Analysis
AbstractThe purpose of this paper is to investigate the effect of retirement on psychological well-being. Findings from previous research in this field are inconsistent, as both positive, negative, and sometimes no effect of retirement on well-being is reported. In the paper we suggest that the divergent results may arise from the mixing of cross-sectional and longitudinal studies, problems with the size and quality of existing longitudinal data, and the statistical methods used to analyze the impact of retirement on well-being. In the paper we propose to deploy the fixed-effect estimator whichs provides consistent estimates of the effect of retirement on well-being, even when retirement is correlated with other observed and unobserved explanatory variables. Using a large (N = 4,634) and nationally representative panel data set with elderly Danish respondents, we find that retirement does not have any significant effect on well-being. When estimating separate model for men and women we find indications (p = .06) that men experience a decline in well-being as a consequence of retirement, while women are unaffected by retirement. Our findings for men would substantiate the crisis theory perspective that holds that retirement implies a loss of important social roles associated with labor market participation. Several suggestions for future research are also discussed.
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Bibliographic InfoPaper provided by University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics in its series CAM Working Papers with number 2004-19.
Length: 15 pages
Date of creation:
Date of revision: Sep 2004
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retirement; psychological well-being; gender; methodology; fixed-effect model;
Find related papers by JEL classification:
- C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
- I31 - Health, Education, and Welfare - - Welfare and Poverty - - - General Welfare
- J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
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- Debra Sabatini Dwyer & Olivia S. Mitchell, 1998.
"Health Problems as Determinants of Retirement: Are Self-Rated Measures Endogenous?,"
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- Esteban Calvo & Natalia Sarkisian & Christopher Tamborini, 2011. "Searching for schools in a low quality market: Evidence from Chile," Working Papers 17, Facultad de Economía y Empresa, Universidad Diego Portales.
- Maes, Marjan & Stammen, Benjamin, 2011. "The impact of (early) retirement on the subsequent physical and mental health of the retired: a survey among general practitioners in Belgium," Working Papers 2011/03, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
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