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Changing Identity: Retiring from Unemployment

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Author Info

  • Clemens Hetschko

    ()
    (Faculty of Economics and Business, FU Berlin)

  • Andreas Knabe

    ()
    (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)

  • Ronnie Schöb

    ()
    (Faculty of Economics and Business, FU Berlin)

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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File URL: http://www.fww.ovgu.de/fww_media/femm/femm_2011/2011_17.pdf
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Bibliographic Info

Paper provided by Otto-von-Guericke University Magdeburg, Faculty of Economics and Management in its series FEMM Working Papers with number 110017.

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Length: 31 pages
Date of creation: Jul 2011
Date of revision:
Handle: RePEc:mag:wpaper:110017

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

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References

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  1. Andreas Knabe & Steffen Rätzel & Ronnie Schöb & Steffen Rätzel & Joachim Weimann, 2009. "Dissatisfied with life, but having a good day- time-use and well-being of the unemployed," FEMM Working Papers 09011, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
  2. Clark, Andrew E. & Diener, Ed & Georgellis, Yannis & Lucas, Richard E., 2006. "Lags and Leads in Life Satisfaction: A Test of the Baseline Hypothesis," IZA Discussion Papers 2526, Institute for the Study of Labor (IZA).
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  22. Michael Shields & Stephen Wheatley Price & Mark Wooden, 2009. "Life satisfaction and the economic and social characteristics of neighbourhoods," Journal of Population Economics, Springer, vol. 22(2), pages 421-443, April.
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Citations

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Cited by:
  1. 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).
  2. Ronnie Schöb, 2012. "Unemployment and Identity," CESifo Working Paper Series 3991, CESifo Group Munich.
  3. 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.
  4. Andrew E. Clark & Conchita D'ambrosio & Simone Ghislandi, 2014. "Adaptation to Poverty in Long-Run Panel Data," Working Papers halshs-00925542, HAL.

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