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Looking Back in Anger? Retirement and Unemployment Scarring

Author

Listed:
  • Clemens Hetschko

    () (Freie Universität Berlin
    Institute for Employment Research (IAB)
    CESifo)

  • Andreas Knabe

    (CESifo
    Otto von Guericke University Magdeburg)

  • Ronnie Schöb

    (Freie Universität Berlin
    CESifo)

Abstract

Unemployment affects future working conditions and job security negatively, thus reducing life satisfaction after reemployment. These employment-related scars of unemployment should not matter anymore when a person has retired. Using German panel data, we analyze unemployed persons’ transition into retirement to test whether unemployment leaves scars beyond working life and thus for reasons that are not employment-related. We find that involuntary unemployment between the last job and retirement causes a loss in life satisfaction after retirement. People who influenced or even initiated unemployment, by contrast, show no scarring. The scarring effect goes beyond what can be explained by the income loss originating from reduced pensions. It shows up independently of whether the unemployment spell directly before retirement was the only experience of unemployment in a person’s career, or whether she had also experienced unemployment at earlier times. We do not find evidence that early retirement or involuntary retirement are the reasons why formerly unemployed retirees display unemployment scarring.

Suggested Citation

  • Clemens Hetschko & Andreas Knabe & Ronnie Schöb, 2019. "Looking Back in Anger? Retirement and Unemployment Scarring," Demography, Springer;Population Association of America (PAA), vol. 56(3), pages 1105-1129, June.
  • Handle: RePEc:spr:demogr:v:56:y:2019:i:3:d:10.1007_s13524-019-00778-2
    DOI: 10.1007/s13524-019-00778-2
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    Cited by:

    1. Hetschko, Clemens & Preuss, Malte, 2020. "Income in jeopardy: How losing employment affects the willingness to take risks," Journal of Economic Psychology, Elsevier, vol. 79(C).
    2. Piper, Alan T., 2014. "Zukunftsangst! Fear of (and hope for) the future and its impact on life satisfaction," MPRA Paper 59557, University Library of Munich, Germany.

    More about this item

    Keywords

    Retirement; Life satisfaction; Unemployment scarring; Involuntary unemployment;

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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