Early Retirement, Social Security and Well-Being in Germany

Börsch-Supan, Axel () and Jürges, Hendrik ()
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Jürges, Hendrik: Munich Center for the Economics of Aging (MEA), Postal: Amalienstr. 33, D-80799 Munich
Authors registered in the RePEc Author Service: Hendrik Juerges

No 7134, MEA discussion paper series from Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy

Abstract: Germans retire early. On the one hand, early retirement is very costly and amplifies the burden which the German public pension system has to carry due to population aging. On the other hand, however, early retirement is also seen as a much appreciated social achievement which increases the well-being especially of those workers who suffer from work-related health problems. This paper investigates the relation between early retirement and well-being using the GSOEP panel data. The general picture that emerges from our analysis is that early retirement as such seems to be related to subjective well-being, in fact more so than normal retirement. Early retirement most probably is a reaction to a health shock. Individuals are less happy in the year of early retirement than in the years before and after retirement. After retirement, individuals attain their pre-retirement satisfaction levels after a relatively short while. Hence, the early retirement effect on well-being appears to be negative and short-lived rather than positive and long. Whether this is an effect of retirement itself or a psychological adaptation to an underlying shock cannot be identified in our data and remains an open research issue waiting for a more objective measurement of health.

Date: 2007-07-03
New Economics Papers: this item is included in nep-age and nep-eec
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Citations: View citations in EconPapers (2)

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Related works:
Chapter: Early Retirement, Social Security and Well-Being in Germany (2009)
Working Paper: Early Retirement, Social Security and Well-Being in Germany (2006)
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