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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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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;

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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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