How Stressful is Retirement? New Evidence from a Longitudinal, Fixed-effects Analysis
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.
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|Date of revision:||Sep 2004|
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- 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.
- Debra Sabatini Dwyer & Olivia S. Mitchell, 1998. "Health Problems as Determinants of Retirement: Are Self-Rated Measures Endogenous?," NBER Working Papers 6503, National Bureau of Economic Research, Inc.
- Debra S. Dwyer & Olivia S. Mitchell, "undated". "Health Problems as Determinants of Retirement: Are Self-Rated Measures Endogenous?," Pension Research Council Working Papers 98-7, Wharton School Pension Research Council, University of Pennsylvania.
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