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

  • Mads Meier Jæger

    (Danish National Institute of Social Research, Copenhagen)

  • Anders Holm

    (Department of Sociology, University of Copenhagen)

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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Paper provided by University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics in its series CAM Working Papers with number 2004-19.

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Length: 15 pages
Date of creation:
Date of revision: Sep 2004
Handle: RePEc:kud:kuieca:2004_19
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  1. Debra S. Dwyer & Olivia S. Mitchell, . "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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