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Changing Identity: Retiring from Unemployment

Author Info

  • 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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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.379163.de/diw_sp0399.pdf
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Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 399.

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Length: 29 p.
Date of creation: 2011
Date of revision:
Handle: RePEc:diw:diwsop:diw_sp399
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Keywords: life satisfaction; retirement; unemployment; identity; social norm;

Other versions of this item:

Find related papers by 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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  1. Bonsang, Eric & Klein, Tobias J., 2012. "Retirement and subjective well-being," Journal of Economic Behavior & Organization, Elsevier, vol. 83(3), pages 311-329.
  2. Daniel Kahneman & Alan B. Krueger, 2006. "Developments in the Measurement of Subjective Well-Being," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 3-24, Winter.
  3. Andrew Clark, 2001. "Unemployment As A Social Norm: Psychological Evidence from Panel Data," DELTA Working Papers 2001-17, DELTA (Ecole normale supérieure).
  4. Andrew Clark & Ed Diener & Yannis Georgellis & Richard E. Lucas, 2003. "Lags and Leads in Life Satisfaction: A Test of the Baseline Hypothesis," DELTA Working Papers 2003-14, DELTA (Ecole normale supérieure).
  5. Alois Stutzer & Rafael Lalive, 2004. "The Role of Social Work Norms in Job Searching and Subjective Well-Being," Journal of the European Economic Association, MIT Press, vol. 2(4), pages 696-719, 06.
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  9. 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.
  10. 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.
  11. Andrew E. Clark & Yannis Georgellis, 2002. "Unemployment Alters the Set-Point for Life Satisfaction," Economics and Finance Discussion Papers 02-16, Economics and Finance Section, School of Social Sciences, Brunel University.
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  13. 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.
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  16. Clark, Andrew E. & Knabe, Andreas & Rätzel, Steffen, 2009. "Boon or Bane? Others' Unemployment, Well-being and Job Insecurity," IZA Discussion Papers 4210, Institute for the Study of Labor (IZA).
  17. Andrew E. Clark & Yarine Fawaz, 2009. "Valuing Jobs Via Retirement: European Evidence," National Institute Economic Review, National Institute of Economic and Social Research, vol. 209(1), pages 88-103, July.
  18. Knabe, Andreas & Rätzel, Steffen & Schöb, Ronnie & Weimann, Joachim, 2009. "Dissatisfied with life, but having a good day: time-use and well-being of the unemployed," Discussion Papers 2009/13, Free University Berlin, School of Business & Economics.
  19. Clark, Andrew E., 2006. "A Note on Unhappiness and Unemployment Duration," IZA Discussion Papers 2406, Institute for the Study of Labor (IZA).
  20. George A. Akerlof & Rachel E. Kranton, 2000. "Economics And Identity," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 715-753, August.
  21. 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.
  22. Nattavudh Powdthavee, 2003. "Are there Regional Variations in the Psychological Cost of Unemployment in South Africa?," Labor and Demography 0310006, EconWPA, revised 28 Oct 2003.
  23. Andrew E. Clark & Andreas Knabe & Steffen Rätzel, 2008. "Boon or Bane? Others' unemployment, well-being and job insecurity," PSE Working Papers halshs-00586022, HAL.
  24. 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.
  25. Gert G. Wagner & Joachim R. Frick & Jürgen Schupp, 2007. "The German Socio-Economic Panel Study (SOEP): Scope, Evolution and Enhancements," SOEPpapers on Multidisciplinary Panel Data Research 1, DIW Berlin, The German Socio-Economic Panel (SOEP).
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  31. repec:pse:psecon:2009-18 is not listed on IDEAS
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Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

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Cited by:

  1. Clemens Hetschko & Andreas Knabe & Ronnie Schöb, 2014. "Looking Back in Anger? Retirement and Unemployment Scarring," CESifo Working Paper Series 4784, CESifo Group Munich.
  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. Milena Nikolova & Carol Graham, 2014. "Employment, late-life work, retirement, and well-being in Europe and the United States," IZA Journal of European Labor Studies, Springer, vol. 3(1), pages 1-30, December.
  4. repec:hal:wpaper:halshs-00925542 is not listed on IDEAS
  5. Peter Eibich, 2014. "The Health Effects of Retirement," DIW Roundup: Politik im Fokus 48, DIW Berlin, German Institute for Economic Research.
  6. Clark, Andrew E. & D'Ambrosio, Conchita & Ghislandi, Simone, 2014. "Adaptation to Poverty in Long-Run Panel Data," IZA Discussion Papers 8656, Institute for the Study of Labor (IZA).
  7. Ronnie Schöb, 2013. "Unemployment and Identity," CESifo Economic Studies, CESifo, vol. 59(1), pages 149-180, March.
  8. Krause, Annabelle, 2014. "Happiness and Work," IZA Discussion Papers 8435, Institute for the Study of Labor (IZA).
  9. Lars Kunze & Nicolai Suppa, 2014. "Bowling Alone or Bowling at All? The Effect of Unemployment on Social Participation," Ruhr Economic Papers 0510, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  10. Peter Eibich, 2014. "Die gesundheitlichen Folgen des Renteneintritts," DIW Roundup: Politik im Fokus 48, DIW Berlin, German Institute for Economic Research.
  11. Hetschko, Clemens, 2014. "On the misery of losing self-employment," Discussion Papers 2014/26, Free University Berlin, School of Business & Economics.
  12. Andrew E. Clark & Conchita D'Ambrosio & Simone Ghislandi, 2014. "Adaptation to Poverty in Long-Run Panel Data," PSE Working Papers halshs-00925542, HAL.
  13. 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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