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Changing Identity: Retiring from Unemployment

Author

Listed:
  • Clemens Hetschko

    (Faculty of Economics and Business, FU Berlin)

  • Andreas Knabe

    (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)

  • Ronnie Schöb

    (Faculty of Economics and Business, FU Berlin)

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.

Suggested Citation

  • Clemens Hetschko & Andreas Knabe & Ronnie Schöb, 2011. "Changing Identity: Retiring from Unemployment," FEMM Working Papers 110017, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
  • Handle: RePEc:mag:wpaper:110017
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    References listed on IDEAS

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    More about this item

    Keywords

    life satisfaction; retirement; unemployment; identity; social norm;
    All these keywords.

    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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