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Abstract

We provide an explanation for the common finding that the effect of retirement on life satisfaction is negligible. For this we use subjective well-being measures for life and domains of life satisfaction that are available in the German Socio-Economic Panel (GSOEP) and show that the effect of voluntary retirement on satisfaction with current household income is negative, while the effect on satisfaction with leisure is positive. At the same time, the effect on health satisfaction is positive but small. Following the life domain approach we then argue that these effects offset each other for an average individual and that therefore the overall effect is negligible. Furthermore, we show that it is important to distinguish between voluntary and involuntary retirement. The effect of involuntary retirement is negative because the adverse effect on satisfaction with household income is bigger, the favorable effect on satisfaction with leisure is smaller, and the effect on satisfaction with health is not significantly different from zero. These results turn out to be robust to using different identification strategies such as fixed effects and first differences estimation, as well as instrumental variables estimation using eligibility ages and plant closures as instruments for voluntary and involuntary retirement.

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... To our knowledge, this is the first study to examine the effect of the actual retirement status of Chinese residents on their SWB and compare it with that of people in statutory retirement with the goal of providing guidance for formulating retirement postponement policies. Moreover, existing studies on retirement issues not only focus on the outcome of general life satisfaction but also examine other domains of life satisfaction (Fye et al., 2020;Bonsang & Klein, 2012). The intra-household retirement spillover effect during the retirement process is widely discussed in studies related to SWB (Chen, 2022;Szinovacz & Davey, 2004). ...
... Our observations include employees who handled internal retirement, while those who retired due to receding procedures are not included in our sample. In addition, following the methods used in previous studies (Horner, 2014;Bonsang & Klein, 2012) and considering the age eligibility for the Chinese pension program and the working conditions of older individuals, we limit the age range of our sample from 45 to 80. Finally, we acquire a dataset containing 9,925 observations. ...
... We also explore four sub-dimensions of SWB. Regarding SWB, numerous studies conduct on satisfaction with health, marriage, and other related aspects (Fye et al., 2020;Bonsang & Klein, 2012). The 2015 and 2018 CHARLS surveys provide three new questions that allow us to measure satisfaction with marriage, satisfaction with health, and satisfaction with respondents' children (referred to as "satisfaction with children"). ...
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Using data from the China Health and Retirement Longitudinal Study (CHARLS), we examine the impacts of retirement on subjective well-being (SWB) among formal sector workers in China. Retirement negatively affects formal sector workers’ life satisfaction, marital satisfaction, and satisfaction with children, as well as worsens depression. We compare the impacts of retirement based on labor force participation with those based on statutory retirement under the mandatory retirement policy on SWB. Both retirement criteria exhibit negative impacts on SWB; however, because many workers continue to work even after being classified as retired statutorily, the negative effect of retirement on SWB is underestimated when using the statutory retirement definition. Additionally, the analyses of gender, regional, and occupational heterogeneity indicate that different subgroups exhibit the same negative impacts of retirement on SWB; however, the significance levels vary across different outcome variables. Finally, by discussing the push and pull factors on retirement decisions and conducting a mechanism analysis, we enrich the narrative on the impact of retirement on SWB and provide evidence for the reform of retirement postponement policies in China.
... We contribute to the existing literature in several important ways: 1. we consider the impact of direct financial market participation post-retirement on retirement income, using both objective and subjective measurements from New Zealand HES 2018 survey data. Much of the prior literature used either objective (Haveman et al. 2007b) or subjective measurements (Bonsang and Klein 2012), while we use both; 2. we use annuitised net wealth without government pension as an alternative proxy for objective measurement, which enables us to determine the significant contribution of individual private savings to post-retirement overall wealth (government pensions included) through financial market participation; 3. we only focus on retirees' post-retirement participation, while the prior literature has mostly focused on the entire population (Bilias et al. 2017;Fagereng et al. 2017); and 4. our results have important policy implications, such that New Zealand policy makers should allocate adequate resources to promote financial literacy in order to increase direct financial market participation. ...
... Subjective well-being has been widely applied and considered to be a good proxy for the measurement of utility functions (Finkelstein et al. 2009). Bonsang and Klein (2012) documented that involuntary retirement schemes result in negative impacts on overall satisfaction regarding retirement financial well-being. Elder and Rudolph (1999) concluded that pre-retirement financial literacy education enhances financial well-being in the US. ...
... Using annuitised net wealth without a government pension enables us to examine the significance of private savings with respect to retirement income. We also use the overall life satisfaction and financial-situation satisfaction of retirees as subjective measures to proxy for retirement income, similar to Bonsang and Klein (2012). Life satisfaction is a question asked of retirees in considering their overall life situation. ...
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Using New Zealand Household Economic Survey (HES) 2018 data, we examine the impact of direct financial market participation post-retirement on retirement income in New Zealand. Our results demonstrate the importance of post-retirement financial market participation in the enhancement of retirees’ financial well-being. We conclude that retirees who participate in the financial market enjoy a 78% increase in overall annuitised net wealth; further analysis also reveals a substantial 154% increase if government pensions are excluded from calculations of annuitised net wealth. Moreover, these retiree participants also show higher probabilities of financial-situation satisfaction. These results highlight the significant contribution to retirement income of direct financial market participation. Our paper sheds extra light on issues related to retirement financial well-being and has important implications for policy makers in New Zealand.
... Retiring is an important life decision for the older worker. It changes various aspects of life such as social life or income, and workers prefer to have a say in the moment they retire (Bonsang & Klein, 2012;Palomäki, 2019). The focus on financial incentives overlooks the fact that the willingness to continue working or not also depends on the quality of the job the older worker has. ...
... Palomäki (2019) suggests to consider also the voluntariness of the retirement decision and the willingness to retire. Several studies come to the conclusion that retiring in itself has generally a negligible effect on subjective well-being (Bonsang & Klein, 2012;Sohier et al., 2021), but Bonsang and Klein (2012) find that workers who are willing to retire but are unable to do so report a lower level of well-being. Those who are willing to retire experience a lower level of life satisfaction than those not willing to retire (Sohier, 2019). ...
... Palomäki (2019) suggests to consider also the voluntariness of the retirement decision and the willingness to retire. Several studies come to the conclusion that retiring in itself has generally a negligible effect on subjective well-being (Bonsang & Klein, 2012;Sohier et al., 2021), but Bonsang and Klein (2012) find that workers who are willing to retire but are unable to do so report a lower level of well-being. Those who are willing to retire experience a lower level of life satisfaction than those not willing to retire (Sohier, 2019). ...
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Many European countries are facing the challenge of increasing the effective retirement age. Increasing the effective retirement age also requires that older employees are voluntarily willing to continue working. A worker who is willing to retire but is not allowed to retire might experience a negative impact on his or her well-being. This articles studies the determinants of the willingness to retire: the job, health, and financial situation of the older worker, and other socio-demographic characteristics. To do this, the micro data of the Survey of Health, Ageing and Retirement in Europe are used, which contains a binary question about willingness to retire. Based on the random effects logit estimator, we find that the job situation of the worker and the retirement of the partner are important drivers of the willingness to retire. Specifically, those willing to retire are more frequently employed in jobs that are mentally and physically demanding. They also feel less appreciated by the management or their colleagues and report to have fewer opportunities to get promotion. The willingness to retire is higher if the older worker has a retired partner. In the countries with the lowest rates of willingness to retire, the workers have better working conditions and are more easily able to make ends meet.
... Some studies document that retirement has a positive impact on individual well-being [2][3][4], but others find only little effect [5,6]. Bonsang and Klein [7] make a distinction between voluntary and involuntary retirement, showing that although the former has a negligible effect on life satisfaction, the latter implies a strong and negative impact. However, the main focus of these studies is on retirement and therefore they do not distinguish between different exit routes from the labor market. ...
... For this purpose it is useful to consider the classical life-cycle model (see e.g., [7,31,32]). This model posits that utility is a function of both consumption expenditure and labor supply. ...
... According to the life-cycle model, a voluntary exit from the workforce brings about a decline in both consumption and income while the amount of leisure time increases [7]. In a similar vein, when individuals leave the workforce involuntarily, both consumption and income decrease, and the amount of leisure time increases. ...
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In this paper we examine the buffering effects of personality traits when people leave their work in later life. Using large-scale panel data for the UK, we show that depending on the exit route and satisfaction related to overall life and the domains of income and leisure, different personality traits act as moderators. Besides augmenting leisure satisfaction for those who hit mandatory retirement, conscientiousness augments life satisfaction for those becoming unemployed. On the contrary, extraversion mitigates satisfaction with life, income, and leisure for those who retire early. This may be an indication that extraverted individuals who tend to be sociable and outgoing may suffer when losing social relationships from their work. At the same time, extraversion may be helpful in augmenting leisure satisfaction for those who stop working for reasons related to ill health or family care. Neuroticism augments income satisfaction for those who become unemployed, which may reflect that people high in neuroticism had a lower “baseline level” of income satisfaction relative to typical individuals so they were not affected as much. Finally, agreeableness mitigates life and leisure satisfaction for those hitting mandatory retirement, as is also the case with openness in terms of income satisfaction.
... The use of SWB data, which has its own merits and limitations, provides a valuable complement to more traditional welfare concepts based on expenditure, income and wealth. The relationship between SWB and retirement is also studied in recent articles from Europe and USA (see for example Charles 2004;Bonsang and Klein 2012;Kapteyn et al. 2013;Montizaan and Vendrik 2014). These studies generally show that retirement has a positive impact on SWB and there is evidence of heterogeneity in terms of retirement circumstances and gender. ...
... There are studies that document heterogeneity in responses to retirement. Bonsang and Klein (2012) examine the causal effect of retirement on domains of life satisfaction using German longitudinal data. They show that involuntary retirement has a negative effect on income satisfaction and consequently on life satisfaction. ...
... The psychology literature has found that perceived control is strongly related to retirement adjustment (van Solinge and Henkens 2005). In an influential study, Bonsang and Klein (2012) For the group of working wives, we observe that involuntary retirement of the husband significantly reduces her life satisfaction. In panel C, the estimated net effect of the involuntary retirement of the husband on her SWB is negative, statistically and economically significant (0.138 -0.302 -0.164). ...
Article
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As the Baby-Boomer generation approaches the retirement stage of the life cycle, understanding the implications of the labour market transition for individuals' well-being is increasingly important for policy making. In this article, we assess whether individuals successfully navigate the transition from work to retirement by analysing changes in subjective well-being with retirement using Australian panel data. To account for the fact that retirement is often a choice, we exploit social security eligibility rules to identify the causal effect of retirement on well-being. We find that life satisfaction significantly improves for the large majority of individuals who voluntarily retire from the labour force. However, there are also important disparities and individuals forced to retire early do not experience gains in life satisfaction with retirement. Moreover, the negative impact of involuntary retirement is greatest for individuals from disadvantaged backgrounds. We also present new evidence on intra-household retirement spillovers by assessing the effect of one partner's retirement circumstances on their spouse's life satisfaction. The article further extends the literature by examining the mechanisms through which retirement affects individuals' life satisfaction. We find that declines in life satisfaction are in part driven by an increase in financial hardship and reduced social interactions.
... Voluntariness of the transition from employment to retirement has been found a crucial factor impacting mental health of retirees, with people retiring involuntarily experiencing higher levels of depressive symptoms and other mental health problems than employees retiring voluntarily or because they reached the statutory retirement age (7,(26)(27)(28). This is likely because involuntary early retirement severely affects personal retirement plans and comes with financial losses and increased uncertainty (29,30). Moreover, the skills and experiences of older workers might not easily be transferrable to other occupations, reducing the chance for reemployment (7). ...
... Therefore, it is reasonable to assume that people actively choosing to retire early can draw upon personal resources for retirement. Several studies found voluntary early retirement to be linked to improved mental health and health satisfaction, although the association tended to diminish over time (7,29,34). ...
... The negative association between voluntary early retirement and depressive symptoms in men might point toward the importance of voluntariness, i.e., whether a true choice to retire was present. This finding is supported by earlier studies, stating that voluntary retirement is protective for mental health, compared to other kinds of retirement (7,26,29,34). For men retiring voluntarily, the expected benefits from retirement might outweigh the advantages of employment. ...
... Research in this area is plagued by definitional complexity. Retirement is variously defined -including via self-reports (e.g., Horner 2014), sometimes with information regarding future working intentions (e.g., Bonsang and Klein 2012); by data on pension receipt (e.g., Westerlund et al. 2010) and through observed annual hours of work over particular age thresholds (e.g., Neumann 2008). There are likewise differing definitions of pensioner employment. ...
... Other studies found that retirement reduced fatigue and depressive symptoms (Westerlund et al. 2010), improved mental health (Mein et al. 2003), and psychological wellbeing (Latif 2011). Other researchers, however, report that voluntary retirement has a negligible impact on SWB (Bonsang and Klein 2012). ...
... Nikolova and Graham (2014), using Gallup World Poll data from the US, found a similar pattern. Highlighting the negative SWB impact of compulsion, involuntary early retirement likewise has a negative impact on wellbeing (Bender 2012;Bonsang and Klein 2012). ...
Article
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Encouraging pensioner employment is one answer to the challenge of aging societies. Employment positively influences the subjective well-being (SWB) of working-age populations, but the implications for pensioners, including variance by gender and occupational class, are unclear. We examine this variance using mixed methods on data from Russia, where pensioner employment is comparatively high. Utilizing data on 5,703 individuals ages 45–70 from 12 waves of the Russian Longitudinal Monitoring Survey (2003–15), we estimate individual fixed-effects models for life satisfaction, exploring mechanisms using longitudinal qualitative data. We find pensioner employment positively influences SWB of both genders across the occupational hierarchy. We attribute the muting of occupational variance to the decommodifying action of pensions. We find gender differences in mechanisms: pensioner employment gives women a noneconomic SWB boost, but additional income explains men’s SWB improvements. We theorize this finding using our qualitative data, showing how gendered age schemas shape pensioner well-being.
... Voluntariness of the transition from employment to retirement has been found a crucial factor impacting mental health of retirees, with people retiring involuntarily experiencing higher levels of depressive symptoms and other mental health problems than employees retiring voluntarily or because they reached the statutory retirement age (7,(26)(27)(28). This is likely because involuntary early retirement severely affects personal retirement plans and comes with financial losses and increased uncertainty (29,30). Moreover, the skills and experiences of older workers might not easily be transferrable to other occupations, reducing the chance for reemployment (7). ...
... Therefore, it is reasonable to assume that people actively choosing to retire early can draw upon personal resources for retirement. Several studies found voluntary early retirement to be linked to improved mental health and health satisfaction, although the association tended to diminish over time (7,29,34). ...
... The negative association between voluntary early retirement and depressive symptoms in men might point toward the importance of voluntariness, i.e., whether a true choice to retire was present. This finding is supported by earlier studies, stating that voluntary retirement is protective for mental health, compared to other kinds of retirement (7,26,29,34). For men retiring voluntarily, the expected benefits from retirement might outweigh the advantages of employment. ...
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Background Transition from employment to retirement is regarded a crucial event. However, there is mixed evidence on associations between retirement and mental health, especially regarding early retirement. In Germany, cases of early retirement due to ill health—particularly, mental ill health—are increasing. Therefore, we investigated the association between early retirement and depressive symptoms, including information on different types of early retirement. Methods We analyzed data from 4,808 participants of the population-based LIFE-Adult-Study (age: 40–65 years, 654 retired, 4,154 employed), controlling for sociodemographic information, social network, pre-existing health conditions, and duration of retirement. Depressive symptoms were assessed using the Center for Epidemiologic Studies Depression Scale. Regression analysis using entropy balancing was applied to achieve covariate balance between retired and employed subjects. Results We found no overall-differences in depressive symptoms between employed and retired persons (men: b = −.52; p = 0.431; women: b = .05; p = .950). When looking at different types of early retirement, ill-health retirement was linked to increased depressive symptoms in women (b = 4.68, 95% CI = 1.71; 7.65), while voluntary retirement was associated with reduced depressive symptoms in men (b= −1.83, 95% CI = −3.22; −.43) even after controlling for covariates. For women, statutory retirement was linked to lower depressive symptomatology (b = −2.00, 95% CI = −3.99; −.02). Conclusion Depressive symptomatology among early retirees depends on reason for retirement: For women, ill-health retirement is linked to higher levels of depressive symptoms. Women who retire early due to ill-health constitute a risk group for depressive symptoms that needs specific attention in the health care and social security system.
... Estudos sobre os antecedentes da decisão para o bridge employment têm demonstrado que, além da saúde e dos atributos financeiros (Bonsang & Klein, 2012), variáveis psicológicas relacionadas com o trabalho, como as atitudes de emprego, estressores da função de trabalho (Pengcharoen & Shultz, 2010;Wang et. al., 2008) e satisfação com o trabalho (Kautonen, Hytti, Bögenhold, & Heinonen, 2012) são fortes preditores da decisão de aposentadoria. ...
... Estudos anteriores (Bonsang & Klein, 2012) demonstraram, ainda, que as pessoas que se aposentam voluntariamente possuem maior satisfação de vida do que aquelas que se aposentaram involuntariamente, e que a participação em bridge employment melhora os níveis de satisfação de vida mesmo daqueles que se aposentaram involuntariamente (Dingemans & Henkens, 2014;Hershey & Henkens, 2013). Uma das formas de tentar minimizar os impactos da involuntariedade é a criação de programas de preparação/orientação para a aposentadoria, uma vez que "planejamentos abrangentes e multitemáticos anteriores à aposentadoria podem ser preditores importantes de uma aposentadoria mais satisfatória" (Leandro- França & Murta, 2014, p. 39). ...
... Estudos anteriores apontam que a aposentadoria involuntária/ possui impacto significativo e negativo no bem-estar dos idosos (Bonsang & Klein, 2012) e que aposentar-se involuntariamente é prejudicial para a satisfação com a vida (Dingemans & Henkens, 2014;Hershey & Henkens,2013). Embora os resultados da presente pesquisa não tenham apresentado diferenças significativas em relação a voluntariedade/involuntariedade da decisão, a menor média de satisfação de vida em relação ao tipo de decisão tomado na aposentadoria apareceu entre aqueles que ainda trabalham, mas em área diferente da carreira regular. ...
Article
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With the increase in life expectancy, the concern with the factors that influence retirement life satisfaction becomes important. In the present quantitative study, the relationships between the aspects related to the work role during the career, the type of retirement decision, and life satisfaction in 89 retirees of a multinational company were verified. Although 83% of the sample answered that retirement was voluntary, 64% said that if they could, they would go back to work. The lowest averages of life satisfaction appeared among those who pointed to the financial motive as the main factor for engaging in paid activity in retirement. The results also indicate that the better the perception of the quality of life during the career, the higher the current level of life satisfaction and the desire not to want to leave work at retirement.
... Our results complement the aforementioned research on the well-being effects of unemployment. We also contribute to the understanding of long-term determinants of well-being over the life course (Frijters et al. 2014;Layard et al. 2014) and add to the literature on the well-being effects of retiring (e.g., Bender 2012;Calvo et al. 2009;Nikolova and Graham 2014). 1 One of this literature's central findings is that people who are forced to retire out of employment suffer from the transition, whereas voluntary retirement does not alter the well-being of employees (e.g., Bonsang and Klein 2012). In contrast, we address retirement out of unemployment. ...
... The scarring effect of unemployment may thus originate from the lack of voluntariness of retirement that the comparison group of employees enjoys. However, only 5 % of formerly unemployed retirees in our sample stated an intent to return to working life after retirement, which Bonsang and Klein (2012) suggested as proxy for voluntariness. To check whether involuntary retirement drives our results, we leave this small group out of the sample; we find the same scarring effects as before (Table S7, online appendix). ...
... When it comes to retirement from employment, we deliberately refer to the unweighted control group because these results represent the average retiree from employment (first column of Table S9), whereas the reweighted control group resembles people who retire from an involuntary episode of unemployment. In line with the previous literature, we find no clear association between retirement and life satisfaction for the average retiree (Bonsang and Klein 2012;Henning et al. 2016;Luhmann et al. 2012). ...
Article
Unemployment affects future working conditions and job security negatively, thus reducing life satisfaction after reemployment. These employment-related scars of unemployment should not matter anymore when a person has retired. Using German panel data, we analyze unemployed persons’ transition into retirement to test whether unemployment leaves scars beyond working life and thus for reasons that are not employment-related. We find that involuntary unemployment between the last job and retirement causes a loss in life satisfaction after retirement. People who influenced or even initiated unemployment, by contrast, show no scarring. The scarring effect goes beyond what can be explained by the income loss originating from reduced pensions. It shows up independently of whether the unemployment spell directly before retirement was the only experience of unemployment in a person’s career, or whether she had also experienced unemployment at earlier times. We do not find evidence that early retirement or involuntary retirement are the reasons why formerly unemployed retirees display unemployment scarring.
... The term subjective well-being describes a person's evaluation of his or her experienced positive and negative affect, happiness or satisfaction with life (Frey and Stutzer 2002). In theory, these terms are separable constructs; however, many studies use them interchangeably since empirical findings suggest strong correlations between alternative satisfaction measurements, e.g., Bonsang and Klein (2012) or Fordyce (1988). Wealth or income, however, often serve as proxies for objective well-being, which can be measured cardinally. ...
... Wealth or income, however, often serve as proxies for objective well-being, which can be measured cardinally. We may decompose overall subjective well-being into several dimensions or domains (Bonsang and Klein 2012); these domains typically include income, leisure time, one's social network, one's job, etc. Here, we narrow our focus on the domain of someone's job or workplace, often called job satisfaction in economics. ...
... Yet, reversing this chain of causality does empirically not hold. The findings by Bonsang and Klein (2012) go into the same direction; while retirement does not affect overall well-being, leisure satisfaction increases and income satisfaction decreases. For retirement policies, an important missing piece in this research agenda is an in-depth investigation of job demands and rewards and their implications on job satisfaction of workers at pre-retirement age. ...
Article
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This paper addresses the question to what extent workplace perception affects the subjective well-being of older workers in their jobs. We use several dimensions of workplace perception to estimate their importance for job satisfaction. Our results show that older workers’ happiness in the job strongly depends on job rewards, in particular on opportunities to develop new skills, receiving support in difficult situations, and recognition for their work. These dimensions of workplace attributes are merely psychological by nature; in contrast, salary opportunities and socio-demographic dimensions have a weaker impact on job satisfaction, if at all. Open Accress at: https://link.springer.com/article/10.1007/s10902-019-00109-7
... Specific employment issues include late-life work and retirement. Research has shown that late-life work has a positive effect on wellbeing, while involuntary retirement decreases wellbeing in the USA (Bender 2012), Germany (Bonsang and Klein 2012) and Australia (Atalay and Barrett 2022). Using data for several European countries and the USA, it was found that late-life workers in voluntary part-time or full-time arrangements have higher wellbeing than retirees, while there is no wellbeing premium for involuntary late-life work compared to retirement (Nikolova and Graham 2014). ...
... Regarding the last stage of the lifecycle, our finding of an increase in the importance of being employed is consistent with previous findings that working late in life has a positive effect on wellbeing, while involuntary retirement reduces wellbeing (Bender 2012;Bonsang and Klein 2012;Atalay and Barrett 2022;Nikolova and Graham 2014). Our finding that the importance of income begins to rise again at around age 80 is consistent with the idea that rising costs of care and medical treatment may put people in financial distress. ...
Article
Previous literature has identified income, health status and social relationships as the most important predictors of subjective wellbeing (SWB). In addition, the literature has identified a non‐linear relationship between age and SWB, with a dip in SWB in midlife. Explanations of the non‐linear age–SWB relationship include the notion of unmet aspirations and the idea that people's emotional response to the drivers of SWB changes with age. Against this background, we use representative longitudinal data for Germany (1992–2019) with about 570,000 observations for more than 88,000 individuals aged 16–105 years to investigate if and how the association between SWB and its main predictors changes over the lifecycle. Using fixed effects estimation to control for cohort effects and unobserved personal characteristics, we find that the marginal effects of income and social relationships vary with age in a wave‐like fashion, while the positive marginal effect of good health status increases monotonically and progressively with age. Our results are similar for alternative measures of SWB (life satisfaction and living in misery), and for men and women separately. The age‐related changes in the importance of income and social relationships for SWB found in this paper help to explain the relationship between age and SWB found in previous literature.
... Gorry et al. (2015) established a causal effect from retirement to health and life satisfaction for US workers. Bonsang and Klein's (2012) such as retirement at young ages, lack of post-retirement preparation, loss of social/economic role, reduced income, and insufficient social welfare (Lee, 1997;Shen, 2007). ...
... The DA model enjoyed a relatively high prediction percentage discriminating between the happy and not-so-happy retirees in (Hershey & Henkens, 2014;Van Solinge & Henkens, 2008). Some analysts went further and established some causal effects of certain well-being features of retirement on life satisfaction (Bonsang & Klein, 2012;Gorry et al., 2015). ...
... It has also been suggested that the effect of retirement on well-being is heterogeneous and may depend on the type of retirement decision, voluntary or involuntary (Bonsang and Klein, 2012), as well as on people's personality characteristics (Kesavayuth et al., 2016). ...
... We focus on satisfaction with three life domainsincome, health and leisureall of which may be significantly affected by retirement (e.g. Wang and Hesketh, 2012;Bonsang and Klein, 2012;Kesavayuth et al., 2016) and for which relevant measures are available both in the BHPS and the UKHLS survey. ...
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In this paper we examine whether and to what extent people anticipate their retirement and adapt to it over time. For identification we use an instrumental variable approach that exploits the eligibility ages for state pension as a source of exogenous variation in retirement status. We show that retirement increases satisfaction with the amount of leisure time up to two years prior to retiring. Upon retirement, individuals reported higher satisfaction with their income and leisure. For leisure the well-being boost did not dissipate over time, but for income satisfaction adaptation was complete. These findings provide new empirical evidence on the causal link between retirement and well-being and suggest that such link may be better understood as a three-stage process occurring before, during and after retirement.
... Section 5.1 represented contemporaneous impact of retirement. It is possible that retirement may have varying effects over time (Bonsang & Klein 2012). To investigate the longer-term impact of retirement, we follow previous studies (Heller-Sahlgren 2017; Le & Nguyen 2018) to separately include leaded values of wellbeing outcomes (i.e., , + , with = 0, 1, 2, … 7) in equation (1) 16 We also experimented with longer leaded values of wellbeing outcomes but found the estimates are not statistically significant, consistent with evidence of a short-lived impact of retirement as presented in Figure 1. ...
... However, we do not observe any statistically significant associations between retirement and the overall life satisfaction and other domains of satisfaction, including Home, Community, Neighbourhood and Personal safety. To this end, our findings are largely consistent with that in a German study byBonsang & Klein (2012) who use a FE model to report that retirement has a positive impact on Free time satisfaction, a negative impact on household income satisfaction and an insignificant effect on Life satisfaction. Our FE finding is also in line with FE results of a negative relationship between retirement and income satisfaction in an European study by ...
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This paper presents robust evidence that retirement causally improves overall life satisfaction which is subsequently explained by improvements in satisfaction with one’s financial situation, free time, health, and participation in local community activities. Furthermore, while the positive wellbeing impact of retirement is sizable initially, it fades after the first 3 years. We find that the improvements in financial satisfaction upon retirement are only observed for low-income individuals. However, the wellbeing impact of retirement does not differ by gender, educational, occupational, economic or marital backgrounds. We also explore several potential explanations for our findings. This paper employs a fixed effect instrumental variable model, which exploits the discontinuity in the eligibility ages for state pension to construct an instrument for retirement, and 18 waves of high-quality Australian panel data. The results also suggest that failing to adequately account for the endogeneity of retirement would result in a downward-biased estimate of a positive wellbeing impact of retirement.
... Regarding the health effects of retirement timing, a large fraction of this literature suggests transitions that happen too early to have detrimental effects on health, which are partly explained by losses in financial, social and psychological resources (Siegrist et al., 2007;Dhaval et al., 2008;Zins et al., 2011;Behncke, 2012;Kuhntopf and Tivig, 2012;Van der Heide et al., 2013;Van der Noordt et al., 2014;Fisher et al., 2016). Although it is clear that this relationship goes both ways, studies using panel data and an instrumental variable approach suggest that retirement timing causes changes in physical and mental health (Bonsang and Klein, 2012;Calvo et al., 2013;Kajitani et al., 2016;Mazzonna and Peracchi, 2016). However, the benefits of working beyond normative ages are not clear (Calvo et al., 2013). ...
... Jamieson, 2007;Lutz and Samir, 2011;Majer et al., 2011;Vogl, 2014;Cutler et al., 2015) and that early transitions into retirement have average detrimental effects on health (e.g. Bonsang and Klein, 2012;Calvo et al., 2013;Fisher et al., 2016;Mazzonna and Peracchi, 2016). This study contributes to existing literature by documenting that formal education continues to be associated with health during the transition to retirement, and more specifically that formal education offsets the detrimental association between early transitions into retirement and both subjective and physical health. ...
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The literature on socio-economic variations in the association between retirement timing and health is inconclusive and largely limited to the moderating role of occupation. By selecting the sample case of Mexico where a sizeable number of older adults have no or very little formal education, this study allows the moderating role of education to be tested properly. Drawing on panel data for 2,430 individuals age 50 and over from the Mexican Health and Aging Study (MHAS) and combining propensity score matching models with fixed-effects regressions, this article investigates differences in the health effects of retirement timing between older adults with varying years of education. Subjective health is measured using a self-reported assessment of respondents’ overall health and physical health as a reverse count of doctor-diagnosed chronic diseases. The results indicate that early transitions into retirement are associated with worse health outcomes, but education fully compensates for the detrimental association with subjective and physical health, while adjusting for baseline health, demographics and socio-economic characteristics. In conclusion, formal education during childhood and adolescence is associated with a long-term protective effect on health. It attenuates negative health consequences of early retirement transitions. Policies and programmes promoting healthy and active ageing would benefit from considering the influence of formal education in shaping older adults’ health after the transition into retirement.
... This instrument is highly relevant to predicting retirement but is unlikely to influence loneliness directly. With the same motivation, the instrument is widely applied to study the effect of retirement on life satisfaction 74,75 , general health 23,58,59 , mental health 27,40,59,61,76,77 , cognitive functioning 22,60,[78][79][80] , health behavior 26,81 , and healthcare use 74 . ...
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This article investigates the short- and long-term impacts of retirement on loneliness using panel data from the Survey of Health, Aging, and Retirement in Europe. To identify causal effects, we exploit differences in retirement rules across and within countries and use retirement thresholds in an instrumental variable setting. On average, we find that entering retirement leads to a reduction in loneliness in the long run and no clear effect in the short run. The reduction is driven by individuals being less likely to feel socially isolated and lacking companionship. Our results suggest that individuals adapt to retirement by increasing their activity levels and reap the benefits in terms of reduced loneliness and social isolation. The heterogeneity analysis shows that this is particularly true among the higher educated. The heterogeneity analysis also reveals that retirement increases feelings of loneliness for women in the short term and that the effect seems to be driven by women lacking companionship when their partner is not yet retired.
... First, because the data source is a public database, the built environment was measured only in terms of the proximity and safety of community public facilities, which is not comprehensive compared to the 3D or 4D factors. Second, in the article, we did not consider the bidirectional causal relationship between health and WB, as some studies have shown that individual WB may also have an impact on health (49,76). However, due to the cross-sectional nature of the data, it is not possible to use time-series methods to eliminate the influence of bidirectional causality. ...
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Objective Based on the social-ecological systems theory and social support theory, this study aims to explore the relationship between a health-supportive environment and well-being among residents. It further examined the mediating role of physical activity and health status in the pathway between a health-supportive environment and well-being. Methods The study utilized data from 2,717 samples of the China General Social Survey (2021) and conducted multiple regression analysis and mediation analysis using statistical software Stata 16.0 and SPSS PROCESS 3.3. Results (1) A health-supportive environment had a significant impact on residents’ well-being (t = 8.476, p < 0.001). (2) Among the three dimensions of natural environment, built environment, and neighborhood social environment, the influence of neighborhood social relationship environment had the strongest influence on residents’ well-being (t = 8.443, p < 0.001). (3) Physical activity and health status played a mediating role in the relationship between a health-supportive environment and residents’ well-being. The mediating effect was as follows: health-supportive environment → physical activity → well-being with a mediation effect of 0.020; health-supportive environment → health status → well-being with a mediation effect of 0.029; health-supportive environment → physical activity → health status → well-being with a mediation effect of 0.008. Conclusion A health-supportive environment not only directly influences residents’ well-being but also indirectly affects it through physical activity and health status. It is essential to focus on improving both the natural and built environment as well as the neighborhood social relationship environment in enhancing residents’ well-being. Physical activity serves as an important means to improve residents’ health level and promote their well-being.
... Our study seeks to better understand the preferences for resource allocations between cohorts and to determine if these decisions have an impact on the long-term wellbeing of the respondents. Consumption and income fall in retirement (Bonsang and Klein, 2012). The Life Cycle model posits that individuals planning for retirement face a trade-off between spending more pre-retirement that Lusardi and Mitchell (2011a) Financial Literacy Inflation Imagine that the interest rate on your savings account was 1% per annum and inflation was 2%. ...
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We investigate the relationship between financial literacy, debt anxiety, risk tolerance, and subsequent resource allocation decisions for cohorts of retirees. Using a survey and the novel comparative method of Multi-Criteria Decision-Making Analysis we prioritise retirement allocation choices of older New Zealanders. Retirees display high financial literacy and together with debt anxiety this is significantly correlated with resource allocation preferences. Financial literacy reduces debt anxiety in men, increases the risk tolerance of women and is associated with a higher preference for KiwiSaver. Greater debt anxiety is associated with debt repayment, and debt avoidance in old age is critical to long-term wellbeing.
... Subjective wellbeing is an alternative way to measure retiree income sufficiency, which focuses on retirees' self-rated happiness (Bonsang and Klein 2012;Tibesigwa et al. 2016). In this paper, we use two subjective wellbeing values, including financial situation satisfaction and life satisfaction. ...
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We use the 2018 survey data from the Household, Income, and Labour Dynamic (HILDA) in Australia and the Household Economic Survey (HES) in New Zealand to investigate the retirement income sufficiency in Australia and New Zealand. Our baseline results indicate that the annuitized net wealth is greater for Australian retirees than for New Zealand retirees. However, New Zealand retirees enjoy a higher level of life satisfaction than Australian retirees. Further analysis reveals a significant greater pre- and postretirement income for the top 10% of wealthy Australian retirees, mainly due to the higher level of homeownership in Australia within this group. Our study fills the gap in the existing literature, which studies the macro- and microlevel influences on Australia and New Zealand retirees, and it also offers important policy implications.
... 2021 Elämänlaatua käsittelevissä tutkimuksissa koetussa toimeentulossa tapahtuvia muutoksia on usein suhteutettu elämään tyytyväisyyteen ja siinä tapahtuviin muutoksiin. Saksalaiseen aineistoon perustuva tutkimus on osoittanut taloudellisen tyytyväisyyden vähenevän eläkkeelle siirryttäessä ja yleisemmän elämään tyytyväisyyden pysyvän tasaisena (Bonsang & Klein 2012). Toisaalta elämään tyytyväisyyden on havaittu myös paranevan eläkkeelle siirryttäessä (Hansson ym. ...
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Tutkimuksessa seurataan 63–85-vuotiaiden vanhuuseläkeläisten toimeentulokokemusten kehitystä vuosien 2017 ja 2020 välillä. Tutkimus perustuu Eläketurvakeskuksen keräämään seuranta-aineistoon, joka sisältää tietoa edustavalta joukolta vanhuuseläkeläisiä kahdelta ajankohdalta.
... In addition, two papers(Bonsang & Klein (2012) andKesavayuth et al.(2020)) modeled the time path around retirement more flexibly using a set of dummies indicating whether someone has retired <1 year ago, 1-2 years age, etc. These papers however do not study health outcomes but measures of life satisfaction. ...
Article
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Does retirement lead to a short, transitory health boost, followed by a stable longer-run effect? The short-run effect has been hypothesized to be a kind of honeymoon effect, that is followed by a longer-run effect that may be either positive or negative. We examine the time path of the health effect of retirement and study effect heterogeneities between individuals along several dimensions. Moreover, we study a broad range of health outcomes, all in order to come to an understanding of the effect patterns that lie behind the diverse findings reported in previous research. For identification we use a fixed effects instrumental variable approach in which the normal and early retirement age thresholds serve as instruments. Using data for 10 countries from the Survey of Health, Retirement and Ageing in Europe (SHARE), we find that retiring both at the normal and early retirement eligibility ages significantly improves all the health aspects we consider. Other than hypothesized, results do not show a honeymoon phase-like transitory health boost. Instead, especially blue-collar workers go through an adjustment period after retiring, in which their health worsens. Afterwards, health stabilizes and improves, so that retirement has a health preserving effect in the longer run. This beneficial health effect of retirement occurs across all occupational groups, across a range of health outcomes, and for both sexes, though there are a number of heterogeneities between groups regarding which health outcomes are particularly affected.
... Dingemans and Henkens (2014) state that the impact of retirement on life satisfaction depends on how close the actual retirement path is to the preferred one, thus a bridge job can mitigate the negative shock. Bender (2012) (using data from the US) and Bonsang and Klein (2012) (using data from Germany) arrive at similar conclusions. Apart from abrupt and forced retirement, job loss at older ages also tends to have negative health effects (Gallo et al., 2000(Gallo et al., , 2006, especially among workers with limited wealth. ...
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We analyze the causal effect of involuntary retirement on detailed indicators of healthcare use and mortality. We leverage a pension reform in Hungary which forced public sector workers above the statutory retirement age to full time retirement. Using rich administrative data, we find that on the 3‐year horizon, involuntary retirement decreases the number of primary care doctor visits, the use of systemic antiinfectives and respiratory drugs, and the non‐zero spending on antiinfectives, the drugs of the alimentary tract and metabolism and of the cardiovascular system. The impact on the latter two drug categories is driven by the drop in income due to involuntary retirement. We conclude that there is little evidence for health deteriorating effects of involuntary retirement and discuss the possible mechanisms behind our results.
... O planejamento para a aposentadoria é importante para que o indivíduo possa lidar com os aspectos inerentes a essa transição. Para os que se aposentam de modo forçado ou sem preparação, esse momento tem um significado negativo (Árraga, Sánchez, & Pirela, 2014;Bonsang & Klein, 2012). Nesse processo de finalização da carreira e construção da aposentadoria, alguns trabalhadores viverão o período com liberdade, curiosidade e dedicação a interesses além do trabalho, como continuação dos estudos, oportunidades para fortalecer os laços familiares e disponibilidade de tempo para novos aprendizados e interesses, todos propícios a trazer satisfação pessoal. ...
Article
This qualitative study aimed to understand the repercussions of workplace bullying and the process of retirement on family dynamics, from the perspective of the couple. It is a single case study, in which the wife was retiring while experiencing workplace bullying. Data were collected through semi-structured interviews with the couple. Categorical content analysis was performed. Results showed direct repercussions of workplace bullying on the wife's physical and emotional condition and also caused conflicts in the family, which required a reorganization and adaptation of family subsystems. The conclusions indicate the importance of recognition of marital and family relations, as intervention strategies to cope with workplace bullying, in the labor context, in the retirement phase.
... A study using data from the United States, the United Kingdom and 11 European countries indicates that early retirement will have a negative impact on cognitive abilities of people in their 60s (Rohwedder and Willis 2010). Research on the elderly in the US has also reached a similar conclusion that retirement will negatively affect their cognitive function (Bonsang and Klein 2012) and endanger their mental health. The investment in health can be regarded as an investment method of labor wages (Thoits 2011). ...
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PurposeA growing number of older workers engage in multiple jobs in the context of delayed retirement initiative and the fast-growing gig economy in China. However, it remains unclear whether multiple jobs holding is beneficial to late retirees.Methods To preliminarily address this issue, this study applies the data of CHARLS-2015 to examine the effect of late retirement and multiple-job holding on mental health among older adults. Besides, instrumental variables (IVs) regression is conducted to clarify potential endogeneity problem.ResultsIt is shown that both late retirement (coef. = − 2.726, p < 0.01) and multiple-job holding (coef. = − 1.523, p < 0.01) alleviate depression among older adults. However, multiple-job holding would weaken the relationship between late retirement and depression (coef. = 2.019, p < 0.01).Conclusion The findings suggest that although the modest engagement in late careers and multiple-job holding could benefit mental health, respectively, the overlap of them could be overburdened for older adults. Policymakers should be aware of the occupational risk of multiple-job holding when incentivizing the delayed retirement to address the population aging.
... For most people, retiring from their main professional job is a significant life event that marks the passage from one stage of life to the next (Vickerstaff and Cox 2005). While some research indicates that most retirees are content with their life, others show that up to one-third of retirees find the transition difficult or suffer a decrease in well-being after retirement (Bonsang and Klein 2012). García (2006) claimed that 84% of the respondents consider it their responsibility to fund their retirement. ...
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Thailand recently reached “aged” society status, signifying that over twenty percent of the population is over sixty. Considering that Thailand has a low literacy rate, a fractured pension system, and no regulations that could provide sufficient income to cover basic needs after retirement, there will be economic repercussions if the situation is not handled soon. The government and financial institutions have been encouraging Thai citizens to prepare retirement plans but lack understanding of the root causes of being unprepared for retirement. The objectives of this qualitative research were to explore the behavior, knowledge, and preparedness towards retirement in governmental and private wageworkers. Moreover, the study aims to identify the pain points of being unprepared for retirement and deliver the optimal solutions and sustainable retirement plans suitable for each segment. This article employed a sample of 46 wageworkers in Khon Kaen, Thailand with ages ranging from 20 to 59 years old. Qualitative semi-structured in-depth interviews and qualitative content analysis were conducted with the respondents asking about their income, expenses, pains, and problems towards saving for retirement, their desired outcome after they retire, and how they would achieve it. The framework used for the in-depth qualitative interview was by utilizing the customer, problem, and solution zoom tool. The research contributions were to facilitate Thai citizens being ready for retirement stages and overcome post-retirement risks sustainably. The results revealed that the sample could be divided into four segments by their characteristics. Two low-income segments share the same traits and behaviors that can prove that financial literacy plays an essential role in retirement readiness. Lower-income wage workers do not have their money put in place to prepare for retirement. Additionally, this article discussed the study’s implications for wageworkers, employers, and the Thai government. This article recommended that Thai citizens should accumulate wealth in various ways, including investment in financial assets and earning additional income from a second job. Employers should provide suitable retirement contribution schemes. The government should launch a policy enabling above-60-year-old seniors to continue working.
... There is also a large empirical literature on the effects of a change in retirement and health; see e.g., Coe and Zamarro (2011), Bonsang and Klein (2012) and Hagen (2018). Another strand of the theoretical literature deals with social security with aging and endogenous retirement; see e.g., Cremer and Pestieau (2003), Cipriani (2018) and Hirono and Mino (2019). ...
Article
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Pay-as-you-go social security schemes in the Organisation for Economic Cooperation and Development countries are facing solvency problems, as people are living longer and birth rates have declined. Postponing the full retirement age (FRA), when retirees are entitled to full pension, has been proposed as a solution. This effectively lowers the payroll tax rate since pension is paid only in the post-FRA period. In a two-period two-sector overlapping generations model, I show that this shift lowers savings (because a part of the expected old-age income is consumed in the first period), as employment increases. In the transition to the new steady state, capital is decumulated and the wage rate falls. Contrast this with a reduction of the payroll tax rate where the initial old suffer reduced consumption, but the young have higher post-tax income and this spurs capital accumulation.
... In addition, two papers(Bonsang & Klein (2012) andKesavayuth et al.(2020)) modeled the time path around retirement more flexibly using a set of dummies indicating whether someone has retired <1 year ago, 1-2 years age, etc. These papers however do not study health outcomes but measures of life satisfaction. ...
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We use a fixed effects instrumental variable approach to investigate whether retirement affects health only temporarily during a honeymoon phase or if health effects materialize after retirement and remain. The normal and early retirement age thresholds are used as instruments. Six health aspects are considered: self-assessed health, depression, limitations in (instrumental) activities of daily living, mobility limitations, grip strength and number of words recalled. Using data for 10 countries from the Survey of Health, Retirement and Ageing in Europe (SHARE), we find that retiring both at the normal and early retirement eligibility ages significantly improves all health aspects, including the objective measure grip strength. Other than hypothesized, results do not show a health boost during the honeymoon phase. Instead, individuals, especially blue-collar workers, go through an adjustment period after retiring, in which they experience more health problems, before stabilizing and improving. Overall, retirement has a health preserving effect for both genders and all occupations in the long term. Neither blue collar workers nor workers with physically or psychologically demanding jobs benefit more from retirement than others.
... However, the effects depend on types of retirement, i.e. voluntary or involuntary retirement. Using the German Socio-Economic Panel (GSOEP), Bonsang and Klein (2012) showed that the effect of voluntary retirement on health satisfaction is small but positive, while involuntary retirement has zero effect on satisfaction with health. For weight outcomes, one study found that men who retired from strenuous jobs, and were at risk of obesity, gained weight significantly (Godard, 2016). ...
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Retirement from paid work is a major transitional point and can have large impacts on lifestyle choices and subsequent health. Using eight waves of data from the English Longitudinal Study of Ageing (ELSA), this paper assesses impacts of both own and partner’s retirement on health and health behaviour by examining heterogeneous effects. We focus on individuals who retired from paid work and estimate fixed effects regression using state pension age (SPA) as an instrumental variable. Our results suggest that whilst own retirement improves health outcomes and increases the probability of engaging in more physical activity, the retirement of a partner does not influence the health or health behaviour of the other partner. The results from sub-sample regressions focusing on differences by sex, education, wealth, and occupation are consistent with these main findings, and find no significant impacts of partner retirement on own health or health behaviour in these sub-groups. Our results for the full sample and the sub-groups are mostly robust to changes in sample restriction and model specification, with only a small number of changes in absolute coefficient size. The results may suggest a role for targeted interventions, particularly amongst those with fewer years of education, lower wealth and some occupational groups.
... To the best of our knowledge, this study is the first that analyses the life satisfaction of worklinked partners. Economists have, so far, been more interested in the effects of different labor market states and characteristics of employment on life satisfaction, such as unemployment (Clark and Oswald, 1994), job insecurity (Luechinger et al., 2010), part-time work (Booth and Van Ours, 2008), retirement (Bonsang and Klein, 2012), and self-employment (Binder and Coad, 2013). 2 However, there is some previous research on related outcomes in the area of management and occupational psychology, which relies on small non-representative samples (Halbesleben et al., 2010(Halbesleben et al., , 2012. Ferguson et al. (2016) provide a relatively extensive study with 1,278 online survey participants in which they find that being work-linked appears to positively correlate with job and family satisfaction. ...
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Work as well as family life are crucial sources of human wellbeing, which however often interfere. This is especially so if partners work in the same occupation or industry. At the same time, being work-linked may benefit their career success. Still, surprisingly little is known about the wellbeing of work-linked couples. Our study fills this gap by examining the satisfaction differences between work-linked and non-work-linked partners. Using data from the German SocioEconomic Panel (SOEP, 2019), we estimate the effect of working in the same occupation and/or industry on life satisfaction as well as satisfaction with four areas of life: income, work, family and leisure. In the process, we employ pooled OLS estimations and instrumental variable strategies, for instance based on the gender disparity in industries and occupations. Our results suggest that being work-linked increases satisfaction with life as well as income and job satisfaction. These findings are consistent with positive assortative matching and mutual career support between work-linked partners. Our conclusions concern hiring couples as a means of recruiting exceptional talent.
... Darity & Goldsmith, 1996;Jahoda, 1981;Kaplan & Schulhofer-Wohl, 2018;Sherman & Shavit, 2012, 2017, in contrast to the "work as bad" thesis (Spencer, 2009). Accordingly, Bonsang and Klein (2012) found that, in Germany, forced retirement had a negative effect on satisfaction with life, apparently due to the drop in satisfaction from the products of labor (income and job satisfaction) and a smaller increase in satisfaction from leisure. ...
Article
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Recent decades have seen significant advances in medicine and healthcare which have led to increased life expectancy and improvements in the overall level of health among all age groups in Israel. As a result of these positive changes, the amount of savings that an individual will need for retirement has increased. Older adults are becoming increasingly healthier and their ability to continue working is improving. These two factors — the need to work longer in order to increase retirements savings and the ability to continue working until an older age — have highlighted the issue of raising the official retirement age and even the possibility of eliminating it altogether. This study will relate to this issue from the perspective of the individual. The goal of the study is to examine the effect of employment status and number of work hours on the subjective well-being of individuals in the 60–80 age group. The research methodology is based on econometric analysis of the data: the first section is based on an analysis of the SHARE data, while the second is based on questionnaires that we distributed.
... In other cases, employers experiencing economic difficulties may use early retirement as a way of making workers redundant that seems less harsh than laying off younger workers. Bonsang and Klein (2012) use a survey item on retired respondents' intentions to return to the workforce in the future to identify cases of involuntary retirement. These people suffer a loss of about 0.5 points on the life satisfaction scale from zero to ten upon retirement. ...
... For older workers in particular, the scarring effects of unexpected job loss could be severe. Job loss at older ages has been associated with longer periods of unemployment than any other age group 3,4 , higher rates of depression and anxiety [5][6][7] , and a sharp increase in the need for medical care due to heightened stress levels and gaps in health insurance coverage 8,9 . Further, when reemployed, older workers suffer significant wage penalties and lower levels of employer-offered pension and health insurance [10][11][12] . ...
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Unemployment shocks from the COVID-19 pandemic have reignited concerns over the long-term effects of job loss on population health. Past research has highlighted the corrosive effects of unemployment on health and health behaviors. This study examines whether the effects of job loss on changes in body mass index (BMI) are moderated by genetic predisposition using data from the U.S. Health and Retirement Study (HRS). To improve detection of gene-by-environment (G x E) interplay, we interacted layoffs from business closures-a plausibly exogenous environmental exposure-with whole-genome polygenic scores (PGSs) that capture genetic contributions to both the population mean (mPGS) and variance (vPGS) of BMI. Results show evidence of genetic moderation using a vPGS (as opposed to an mPGS) and indicate genome-wide summary measures of phenotypic plasticity may further our understanding of how environmental stimuli modify the distribution of complex traits in a population.
... First, we estimate the model using what is essentially a "fuzzy " regression discontinuity approach combined with fixed effects. Following Bonsang and Klein (2012) , we use indicators for reaching ages 60, 63 and 65, the usual early and full retirement ages for our sample. While reaching these specific ages has a direct effect on the probability of retirement, it is unlikely that, keeping retirement constant, the effect of age on home production is discontinuous at these (or other) ages. ...
Article
We analyse the effects of retirement of one partner on time devoted to home production by both partners in a couple. Using longitudinal data on couples in Germany, we control for fixed household specific effects and allow for endogeneity of retirement using both a regression discontinuity approach and variation in the early and full retirement age across cohorts and with labour market history. Furthermore, we separately estimate the effect of retirement and the effect of lay-off due to an exogenous shock (i.e. plant closure) for each spouse. For both men and women, a transition from work to retirement significantly increases the amount of their own home production. Similar effects are found for other (layoff induced) exits from work. We find much smaller negative cross-effects of retirement or other exits from work on time spent on home production done by the male partner; the effect of the husband's retirement on the wife's home production is not statistically significant.
... Other literature using life satisfaction as well-being outcome reports either a positive effect (Horner 2014;Wetzel et al. 2015;Gorry et al. 2018) or no effect (Gall et al. 1997;Warr et al. 2004;Abolhassani and Alessie 2013). Bonsang and Klein (2012) explain the negligible effect of retirement on life satisfaction by opposing effects on satisfaction with household income (negative), satisfaction with leisure (positive) and satisfaction with health (positive but small). The way wellbeing is conceived is thus a crucial element. ...
Article
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We investigate the consequences of retirement from work for the overall well-being of individuals aged 50 and above. Well-being is captured by two different concepts: life satisfaction and agency-freedom, i.e. the evaluation of a person’s ability to do the things s/he wants to do and be who s/he wants to be. We use three observation periods of the Survey of Health, Ageing and Retirement in Europe and include nine European countries. The sample counts 62,082 observations (38,344 individuals) of at least 50 years old. A fixed-effects estimation approach is used so that differences in (time-invariant) individual characteristics are taken into account. We control for changes in financial and health situations of the individual and the situations of the partner. When retiring, people do not immediately report (on average) a different level of life satisfaction, but after 2 years, life satisfaction decreases compared to the beginning of the retirement [identified as Atchley’s honeymoon effect (The sociology or retirement, Wiley, New York, 1976)]. If well-being is expressed as agency-freedom, well-being is immediately positively affected, and this effect does not change after 2 years of retirement. This paper also investigates several forms of heterogeneities in the transition from work to retirement. We consider partial, early and joint retirement, part-time employment and self-employment, and job quality. We find that there is no difference in overall well-being between being partially and fully retired, between being retired before or after the normal retirement age or between those who retire simultaneously with their partner and those who do not. However, for some older workers, such as those employed with a low-quality job, retirement can be a relief from their current employment status. In summary, a policy for longer working careers is, on average, not detrimental to well-being, but some specific groups need special treatment.
... Literature on the effect of education on subjective well-being is inconsistent, although modern studies suggest a negligible effect after expectations are met (Kristoffersen 2018). Furthermore, the effect of retirement has also been found to be minimal (Bonsang and Klein 2012). On the other hand, unemployment negatively impacts subjective well-being, even more so in old age (Winkelmann and Winkelmann 1998;Pultz et al. 2017). ...
Article
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In this article, we study the causal effects of two economic standing measures on the subjective well-being of the elderly, as well as the moderating effects of distinct welfare regimes on these relationships. For our analysis, we classify countries into the following welfare regimes: Conservative, Social-democratic, Mediterranean, and Post-socialist. We address the income endogeneity issue by utilizing the panel structure of our data and instrumenting for income. Our findings show that the significance and strength of the effects of both economic standing measures on life satisfaction are moderated by the institutional context or welfare regime type, which we support by providing several robustness checks. Finally, we make a deeper inquiry into the heterogeneity of the countries classified. After controlling for endogeneity, our results indicate that the relationship between economic standing and life satisfaction is mostly driven by individual countries, which suggests caution when studying the effect of economic standing on subjective well-being.
... They also offer evidence that individuals who have been unemployed for a long time have lower levels of distress than those who have recently become jobless. By means of comprehensive panel data on Germany, Bonsang and Klein (2012) show that, in line with Clark and Oswald's (1994) established result, involuntary retirement is negatively associated with life satisfaction, whereas voluntary retirement has a small positive effect on life satisfaction. Based on US data, Blanchflower and Oswald (2004) document that marital status is very important for happiness, as both being separated and being widowed are significantly and negatively associated with reported happiness (see on this also Lucas, Clark, Georgellis, & Diener's, 2003, longitudinal study on the effects of marital transitions on life satisfaction). ...
Article
In this study, by employing large-scale survey data from four waves of the US Health and Retirement Study (HRS), we explore the (potentially long-lasting) effects of individuals’ exposure to psychologically traumatic life experiences on their subjective well-being. To this aim, we exploit the richness of our dataset, that contains information about occurrence and timing of a set of extreme events out of individuals’ control that may leave a “scar” extending to their current levels of life satisfaction in general as well as with regard to specific life domains. Our findings indicate that having a close relative hit by a life-threatening illness or accident and, especially, having been victim of a serious physical attack or assault are negatively related to both general and domain-specific life satisfaction, even after controlling for personality traits. Next, life satisfaction is significantly lowered by being physically abused by a parent. Overall, we provide evidence that the effects of some traumatic events are persistent over time and mostly related to women. Surprisingly, the effects of child death are negligible also in the short term.
... Mazzonna and Perracchi, 2017), whether retirement is voluntary or not (e.g. Bonsang and Klein, 2012), and people's personality characteristics (e.g. Kesavayuth et al., 2016). ...
Article
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This paper examines the direct effects of retirement on health, as well as its indirect effects, through a mediation analysis. Using Australian panel data, analysis reveals that changes in retirement status and retirement duration imply positive causal effects on self-assessed health as well as physical and mental health. Gender plays an important role in shaping these relationships. For women, the positive relationship between retirement duration and health can be attributed to physical activity. In contrast, men appear to enjoy better health when staying retired for longer because they participate more in outdoor activities.
... Hetschko et al. (2014) document wellbeing increases among German males for whom attaining statutory retirement age amounts to an escape from identification as an unemployed individual. Bonsang and Klein (2012) show that life satisfaction gains from increased leisure are fully offset in Germany when retirement is involuntary. Kesavayuth et al. (2016) find that retirement at state pension eligibility age may not increase wellbeing among British workers. ...
Article
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This paper examines the impacts of a large and anticipated government transfer, the Russian old-age pension, on labor supply, home production, and subjective wellbeing. The discontinuity in eligibility at pension age is exploited for inference. The 2006–2011 Russian Longitudinal Monitoring Survey is employed. At pension age, women reduce market work and appear to increase home production. They report increased wellbeing. Men reduce labor supply without any apparent increase in wellbeing. Pension receipt does not impact household composition.
Article
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Using a qualitative approach, this study investigates older workers’ perceptions about the necessary conditions to continue working after retirement. The 339 participants were aged 50 or over, literate and active in the job market. The research focused on the individual perspective on work continuity after retirement, with data analysis carried out using the IRaMuTeQ software. The results indicate that the decision to continue working is influenced by immediate factors (health and quality of life), and by future factors (expectations for the new life cycle and perception of autonomy). It is concluded that the retirement decision is shaped by individual factors, health conditions, financial needs and subjective elements related to professional satisfaction and the work environment.
Article
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We estimate the causal effects of retirement on health services utilization in Vietnam. Using authorized retirement ages as instruments for exogenous changes in retirement, we find positive and strong effects of retirement on outpatient health services in the public health sector. Retirement increases the probability of an outpatient visit by 51 percentage points for males and 36 percentage points for females, and the frequency of outpatient visits by 1.4 times for males and 2 times for females. However, we find no effect on the use of public inpatient services as well as private health services.
Article
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Unemployment shocks from the COVID-19 pandemic have reignited concerns over the long-term effects of job loss on population health. Past research has highlighted the corrosive effects of unemployment on health and health behaviors. This study examines whether the effects of job loss on changes in body mass index (BMI) are moderated by genetic predisposition using data from the U.S. Health and Retirement Study (HRS). To improve detection of gene-by-environment (G × E) interplay, we interacted layoffs from business closures—a plausibly exogenous environmental exposure—with whole-genome polygenic scores (PGSs) that capture genetic contributions to both the population mean (mPGS) and variance (vPGS) of BMI. Results show evidence of genetic moderation using a vPGS (as opposed to an mPGS) and indicate genome-wide summary measures of phenotypic plasticity may further our understanding of how environmental stimuli modify the distribution of complex traits in a population.
Chapter
Estimated research findings suggest that almost two-thirds of adults with psychiatric conditions do not receive the required treatment services. This chapter enables readers to understand various aspects of ageing, how physical and mental health aspects are correlated, and which mental health conditions are most common in later life. The chapter also discusses major models of mental health in the context of ageing. Major psychiatric and psychological conditions that are most common in old age are outlined along with a major milestone of old age (i.e., retirement: a major lifestyle change that pushes older people towards psychological problems and adjustment issues with a new phase of life). A brief description is presented on the current status of psychiatric and psychological services for mental health issues of the elderly. The chapter concludes by summarizing the contents of discussed areas. Studies are presented throughout the chapter to accompany and enrich the discussion and validate the chapter content.
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We investigate conditions sufficient for identification of average treatment effects using instrumental variables. First we show that the existence of valid instruments is not sufficient to identify any meaningful average treatment effect. We then establish that the combination of an instrument and a condition on the relation between the instrument and the participation status is sufficient for identification of a local average treatment effect for those who can be induced to change their participation status by changing the value of the instrument. Finally we derive the probability limit of the standard IV estimator under these conditions. It is seen to be a weighted average of local average treatment effects.
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An economist who is nothing but an economist is a danger to his neighbours. Economics is not a thing in itself; it is a study of one aspect of the life of man in society. John R. Hicks 1941: 6–7, cited by Meier 1991: 352 John Hicks's statement is important in many ways. First, it states that there are many aspects or domains in a person's life; thus, a person's wellbeing is expected to be related to her situation in all these aspects of life. Second, it recognises that economists usually deal with just one aspect of a person's life; hence, it is impossible to understand a person's wellbeing from an economic perspective alone. Third, it also recognises that economics, as a discipline, is an academic construct that studies only one aspect of a person's life. Hicks's comment refers to economics but it could also apply to any other of the social sciences. Fourth, it recognises that every person is in a society; hence, her wellbeing should be understood within her particular context and culture and in her relation to other persons. Consequently, a person is defined as such within her specific context, and there is no room for an out-of-any-context individual. Finally, it calls for an interdisciplinary study of human beings. This investigation uses a life-satisfaction conception to study wellbeing. The investigation directly asks persons about their satisfaction with their lives, and this information is used as a proxy for a person's wellbeing.
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In this chapter the authors apply the model of selection, optimization, and compensation (SOC; e.g., M. M. Baltes and L. L. Carstensen, 1998) processes to the domain of successful development and aging. To demonstrate the processes of SOC in this domain, they present 3 empirical illustrations that (1) support the hypothesis that SOC contributes to successful aging (A. M. Freund and P. B. Baltes; see record 1998-11674-001), (2) apply SOC to the domain of identity maintenance in old age (Freund, 1995), and (3) integrate findings from the aging and cognition literature with SOC. Future directions for SOC as a model of successful aging are discussed. (PsycINFO Database Record (c) 2012 APA, all rights reserved)
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As increasingly more people experience old age as a time of growth and productivity, theoretical attention to successful ageing is needed. In this paper, we overview historical, societal and philosophical evidence for a deep, long-standing ambivalence about human ageing that has influenced even scientific views of old age. In recent years, however, discussion of the psychological and behavioural processes people use to maintain and reach new goals in late life has gained momentum. We contribute to this discussion the metamodel of selective optimisation with compensation, developed by Baltes and Baltes. The model is a metamodel that attempts to represent scientific knowledge about the nature of development and ageing with the focus on successful adaptation. The model takes gains and losses jointly into account, pays attention to the great heterogeneity in ageing and successful ageing, and views successful mastery of goals in the face of losses endemic to advanced age as the result of the interplay of the three processes, selection, compensation, and optimisation. We review evidence from the biological and social science literatures for each component and discuss new research avenues to study the interaction of the three processes.
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We look for evidence of habituation in twenty waves of German panel data: do individuals tend to return to some baseline level of well-being after life and labour market events? Although the strongest life satisfaction effect is often at the time of the event, we find significant lag and lead effects. We cannot reject the hypothesis of complete adaptation to marriage, divorce, widowhood, birth of child and layoff. However, there is little evidence of adaptation to unemployment for men. Men are somewhat more affected by labour market events (unemployment and layoffs) than are women but in general the patterns of anticipation and adaptation are remarkably similar by sex.
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Although the health effect of retirement has important policy implications, few economists have researched the topic. This paper utilizes longitudinal data from the Health and Retirement Study and instruments retirement status using exogenous variation in public and private pensions. Subjective health change models indicate retirement preserves the health of both men and women, although insignificant results for objective health change models suggest the preservation may be more perceived than real. The same pattern of results is found using continuous measures of annual hours. At the very least, the results give strong evidence against the anecdotal idea that retirement harms health.
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This paper presents an empirical analysis of the importance of ‘comparison income’ for individual well-being or happiness. In other words, the influence of the income of a reference group on individual well-being is examined. The main novelty is that various hypotheses are tested: the importance of the own income, the relevance of the income of the reference group and of the distance between the own income and the income of the reference group, and most importantly the asymmetry of comparisons, i.e. the comparison income effect differing between rich and poor individuals. The analysis uses a self-reported measure of satisfaction with life as a measure of individual well-being. The data come from a large German panel known as GSOEP. The study concludes that the income of the reference group is about as important as the own income for individual happiness, that individuals are happier the larger their income is in comparison with the income of the reference group, and that for West Germany this comparison effect is asymmetric. This final result supports Dusenberry's idea that comparisons are mostly upwards.
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Recent work suggests that a person’s subjective well-being (SWB) depends to a large degree on relative-income. Focusing on the underlying identification, this paper makes four contributions to this literature: it describes the aggregation problem with past studies, implements an estimation strategy to overcome this problem, finds micro-level evidence in support of the hypothesis that relative-income does matter in individual assessments of SWB, and uses cross-section estimates to replicate the aggregate time-series. The evidence further indicates that relative-income effects may be smaller at low income levels. The results are obtained from ordered probit techniques and the general social survey (GSS).
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The hypothesis that individuals try to maximize their life-satisfaction is analyzed. The approach was to derive empirically testable predictions as to the relationships between intentions, actions, importance weights, and satisfaction levels that would be consistent with the hypothesis, and to test these predictions on a Russian and a German panel data set. The respondents investigated were more likely to intend to change those areas they are unsatisfied with in this period, were more likely to actually have changed those areas they were unsatisfied with in the last period, and tended to find the areas of their lives they were dissatisfied with less important. The relationships were not very strong though and were more reliable for the German data set than for the Russian data set. The findings therefore give only limited support to the hypothesis examined.
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Analyzing the consumption behavior over retirement in Germany, this paper finds a negative correlation between income replacement and the increase in home-production-related activities. This might reconcile the observed drop in consumption at retirement with the predictions of the standard life cycle model. However, since individuals with fairly stable income over retirement also increase home production, this increase cannot be entirely attributed to a substitution effect. (c) 2005 Elsevier B.V. All rights reserved.
Article
What are the health impacts of retirement? As talk of raising retirement ages in pensions and social security schemes continues around the world, it is important to know both the costs and benefits for the individual, as well as the governments' budgets. In this paper we use the Survey of Health, Ageing and Retirement in Europe (SHARE) dataset to address this question in a multi-country setting. We use country-specific early and full retirement ages as instruments for retirement behavior. These statutory retirement ages clearly induce retirement, but are not related to an individual's health. Exploiting the discontinuities in retirement behavior across countries, we find significant evidence that retirement has a health-preserving effect on overall general health. Our estimates indicate that retirement leads to a 35 percent decrease in the probability of reporting to be in fair, bad, or very bad health, and an almost one standard deviation improvement in the health index. While the self-reported health seems to be a temporary impact, the health index indicates there are long-lasting health differences.
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While much has been made of the value of employment relative to unemployment, much less is known about the value of work relative to retirement. We here use two European panel datasets to first show that psychological well-being (measured on the EURO-D and GHQ scales) barely changes on average when individuals retire. However, there is a great deal of heterogeneity in the size of the change between job type and between individuals. Some gain on leaving work, while others experience substantial falls in well-being on retiring, suggesting that they may have preferred to carry on working. We suggest that the results of these analyses can help to inform policy aiming to encourage labour supply by older workers.
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In Germany, employees are generally obliged to participate in the public health insurance system, where coverage is universal, co-payments and deductibles are moderate, and premia are based on income. However, they may buy private insurance instead if their income exceeds the compulsory insurance threshold. Here, premia are based on age and health, individuals may choose to what extent they are covered, and deductibles and co-payments are common. In this paper, we estimate the effect of private insurance coverage on the number of doctor visits, the number of nights spent in a hospital and self-assessed health. Variation in income around the compulsory insurance threshold provides a natural experiment that we exploit to control for selection into private insurance. We document that income is measured with error and suggest an approach to take this into account. We find negative effects of private insurance coverage on the number of doctor visits, no effects on the number of nights spent in a hospital, and positive effects on health.
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The simple one-good model of life-cycle consumption requires "consumption smoothing." However, British and U.S. households apparently reduce consumption at retirement and the reduction cannot be explained by the life-cycle model. An interpretation is that retirees are surprised by the inadequacy of resources. This interpretation challenges the life-cycle model where consumers are forward looking. However, data on anticipated consumption changes at retirement and on realized consumption changes following retirement show that the reductions are fully anticipated. Apparently the decline is due to the cessation of workrelated expenses and the substitution of home production for market-purchased goods and services. Social Security Administration http://deepblue.lib.umich.edu/bitstream/2027.42/50550/1/wp069.pdf
Article
Using pseudo-panel data, we estimate the structural parameters of a life-cycle consumption model with discrete labor supply choice. A focus of our analysis is the abrupt drop in consumption upon retirement for a typical household. The literature sometimes refers to the drop, which in the U.S. Consumer Expenditure Survey we estimate to be approximately 16%, as the "retirement-consumption puzzle." Although a downward step in consumption at retirement contradicts predictions from life-cycle models with additively separable consumption and leisure, or with continuous work-hour options, a consumption jump is consistent with a setup having nonseparable preferences over consumption and leisure and requiring discrete work choices. This paper specifies a life-cycle model with these latter two elements, and it uses the empirical magnitude of the drop in consumption at retirement to provide an advantageous method of identifying structural parameters-most importantly, the intertemporal elasticity of substitution. Social Security Administration http://deepblue.lib.umich.edu/bitstream/2027.42/50520/1/wp099.pdf
Article
This study estimates the effect of job loss on health for near elderly employees based on longitudinal data from the Health and Retirement Study. Previous studies find a strong negative correlation between unemployment and health. To control for possible reverse causality, this study focuses on people who were laid off for an exogenous reason - the closure of their previous employers' business. I find no causal effect of exogenous job loss on various measures of physical and mental health. This suggests that the inferior health of the unemployed compared to the employed could be explained by reverse causality.
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Consumption expenditure declines sharply at the time of retirement for many households, but the majority maintain a smooth consumption path. A simple life cycle model with uncertainty about the time of retirement can account for this pattern. A richer version of the model is calibrated to data from the Health and Retirement Study (HRS). The median change in consumption expenditure at retirement generated by the model is zero, while the mean is negative, matching the HRS data. However, the magnitude of the drop in consumption among households that experience a decline is too small in the model compared to the data.
Article
Previous research finds a systematic decrease in consumption at retirement, a finding that is inconsistent with the life cycle/permanent income hypothesis if retirement is an expected event. In this paper, we use workers' subjective beliefs about their retirement dates as an instrument for retirement. After demonstrating that subjective retirement expectations are strong predictors of subsequent retirement decisions, we still find a consumption decline at retirement for workers who retire when expected. However, our estimates of this consumption fall are about a third less than those found when we instead rely on the instrumental variables strategy used in prior studies. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
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If the marginal utility of consumption depends on health status, this will affect the economic analysis of a number of central problems in public finance, including the optimal structure of health insurance and optimal life cycle savings. In this paper, we describe the promises and challenges of various approaches to estimating the effect of health on the marginal utility of consumption. Our basic conclusion is that while none of these approaches is a panacea, many offer the potential to shed important insights on the nature of health state dependence.
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Researchers during the past decade have found little effect of retirement on physical health. However, retirement entails a number of losses, and its effect on mental health, as measured by the prevalence of psychological symptoms, is unclear. We examined psychological symptoms in a sample of 1,513 older men, participants in the Normative Aging Study, using the SCL-90-R (Derogatis, 1983). Analyses of variance indicated that retirees reported more psychological symptoms than did workers, even after controlling for physical health status. Exploratory analyses examining the circumstances of retirement found no effects for length of retirement or part-time employment, but did find effects for the timing of retirement. Both early and late retirees reported more psychological symptoms. Late workers (aged 66 and older) reported the fewest symptoms. Reasons for these findings are discussed.
Article
To assess the short-term effect of retirement on mental health and health behaviors of members of a health maintenance organization aged 60–66, questionnaires were completed in 1985 and 1987 by employed members planning to retire during the study period and those not planning to retire. Mental health and health behaviors of members who actually retired (n = 320) were compared with those members who did not retire (n = 275). Using logistic regression controlling for age, gender, marital status, and education, we found that retired members were more likely to have lower stress levels and to engage in regular exercise more often as compared to those who did not retire during the study period. Retired women were more likely to report no alcohol problems as compared to nonretired women. There were no differences between the groups on self-reported mental health status, coping, depression, smoking, alcohol consumption, and frequency of drunkenness. These findings underscore the importance of assessing positive benefits associated with retirement and call for further evaluation of whether these benefits persist over time.
Article
The convergent and discriminant validities of well-being concepts were examined using multitrait-multimethod matrix analyses (D. T. Campbell & D. W. Fiske, 1959) on 3 sets of data. In Study 1, participants completed measures of life satisfaction, positive affect, negative affect, self-esteem, and optimism on 2 occasions 4 weeks apart and also obtained 3 informant ratings. In Study 2, participants completed each of the 5 measures on 2 occasions 2 years apart and collected informant reports at Time 2. In Study 3, participants completed 2 different scales for each of the 5 constructs. Analyses showed that (a) life satisfaction is discriminable from positive and negative affect, (b) positive affect is discriminable from negative affect, (c) life satisfaction is discriminable from optimism and self-esteem, and (d) optimism is separable from trait measures of negative affect.
Article
According to set-point theories of subjective well-being, people react to events but then return to baseline levels of happiness and satisfaction over time. We tested this idea by examining reaction and adaptation to unemployment in a 15-year longitudinal study of more than 24,000 individuals living in Germany. In accordance with set-point theories, individuals reacted strongly to unemployment and then shifted back toward their baseline levels of life satisfaction. However, on average, individuals did not completely return to their former levels of satisfaction, even after they became reemployed. Furthermore, contrary to expectations from adaptation theories, people who had experienced unemployment in the past did not react any less negatively to a new bout of unemployment than did people who had not been previously unemployed. These results suggest that although life satisfaction is moderately stable over time, life events can have a strong influence on long-term levels of subjective well-being.
Article
Successful aging is an important concept, and one that has been the subject of much research. During the last 15 years, the emphasis of this research has shifted from formulating criteria for successful aging to describing the processes involved in successful aging. The main purpose of the present article is to review psychological models of successful aging. The model of Selective Optimization with Compensation (SOC-model) proves to be one of the leading models in this field. Although evidence about its value is accumulating, we argue that this model mainly focuses on how people react to losses and that proactive coping aimed at preventing potential threats to goals may also be a valuable strategy. We propose that proactive coping may be important for successful aging, since it results in a prolonged availability of resources for optimization and compensation processes and a delay in disengagement from important goals.
Article
This paper assesses how retirement - defined as permanent labor force non-participation in a man's mature years - affects psychological welfare. The raw correlation between retirement and well-being is negative. But this does not imply causation. In particular, people with idiosyncratically low well-being, or people facing transitory shocks which adversely affect well-being might disproportionately select into retirement. Discontinuous retirement incentives in the Social Security System, and changes in laws affecting mandatory retirement and Social Security benefits allows the exogenous effect of retirement on happiness to be estimated. The paper finds that the direct effect of retirement on well-being is positive once the fact that retirement and well being are simultaneously determined is accounted for.