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How Stressful is Retirement? New Evidence from a Longitudinal, Fixed-effects Analysis

Author

Listed:
  • Mads Meier Jæger

    (Danish National Institute of Social Research, Copenhagen)

  • Anders Holm

    (Department of Sociology, University of Copenhagen)

Abstract

The 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.

Suggested Citation

  • Mads Meier Jæger & Anders Holm, "undated". "How Stressful is Retirement? New Evidence from a Longitudinal, Fixed-effects Analysis," CAM Working Papers 2004-19, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics, revised Sep 2004.
    • Handle: RePEc:kud:kuieca:2004_19
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    File URL: http://www.econ.ku.dk/cam/wp0910/wp0203/2004-19.pdf/
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    References listed on IDEAS

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    1. Olsen, Rolf Bang & Olsen, Jørn & Gunner-Svensson, Finn & Waldstrøm, Bodil, 1991. "Social networks and longevity. A 14 year follow-up study among elderly in Denmark," Social Science & Medicine, Elsevier, vol. 33(10), pages 1189-1195, January.
    2. Dwyer, Debra Sabatini & Mitchell, Olivia S., 1999. "Health problems as determinants of retirement: Are self-rated measures endogenous?," Journal of Health Economics, Elsevier, vol. 18(2), pages 173-193, April.
    3. Amy Mehraban Pienta & Mark D. Hayward, 2002. "Who Expects to Continue Working After Age 62? The Retirement Plans of Couples," The Journals of Gerontology: Series B, The Gerontological Society of America, vol. 57(4), pages 199-208.
    4. Ashenfelter, Orley C, 1978. "Estimating the Effect of Training Programs on Earnings," The Review of Economics and Statistics, MIT Press, vol. 60(1), pages 47-57, February.
    5. Gary W. Evans & Elyse Kantrowitz & Paul Eshelman, 2002. "Housing Quality and Psychological Well-Being Among the Elderly Population," The Journals of Gerontology: Series B, The Gerontological Society of America, vol. 57(4), pages 381-383.
    6. Thomas, Paula D. & Garry, Philip J. & Goodwin, Jean M. & Goodwin, James S., 1985. "Social bonds in a healthy elderly sample: Characteristics and associated variables," Social Science & Medicine, Elsevier, vol. 20(4), pages 365-369, January.
    7. Jungmeen E. Kim & Phyllis Moen, 2002. "Retirement Transitions, Gender, and Psychological Well-Being," The Journals of Gerontology: Series B, The Gerontological Society of America, vol. 57(3), pages 212-222.
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    Cited by:

    1. Maja Tadic & Wido Oerlemans & Arnold Bakker & Ruut Veenhoven, 2013. "Daily Activities and Happiness in Later Life: The Role of Work Status," Journal of Happiness Studies, Springer, vol. 14(5), pages 1507-1527, October.
    2. Morten Blekesaune & Thomas Hansen, 2021. "Human Values and Retirement Experiences: a Longitudinal Analysis of Norwegian Data," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 157(3), pages 1001-1019, October.
    3. Latif, Ehsan, 2011. "The impact of retirement on psychological well-being in Canada," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(4), pages 373-380, August.
    4. 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.
    5. 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;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-30, December.
    6. 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.

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    Keywords

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    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, 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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