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

Mads Meier Jæger and Anders Holm ()
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Mads Meier Jæger: Danish National Institute of Social Research, Copenhagen

No 2004-19, CAM Working Papers from University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics

Abstract: The purpose of this paper is to investigate the effect of retirement on psychological well-being. Findings from previous research in this field are inconsistent, as both positive, negative, and sometimes no effect of retirement on well-being is reported. In the paper we suggest that the divergent results may arise from the mixing of cross-sectional and longitudinal studies, problems with the size and quality of existing longitudinal data, and the statistical methods used to analyze the impact of retirement on well-being. In the paper we propose to deploy the fixed-effect estimator whichs provides consistent estimates of the effect of retirement on well-being, even when retirement is correlated with other observed and unobserved explanatory variables. Using a large (N = 4,634) and nationally representative panel data set with elderly Danish respondents, we find that retirement does not have any significant effect on well-being. When estimating separate model for men and women we find indications (p = .06) that men experience a decline in well-being as a consequence of retirement, while women are unaffected by retirement. Our findings for men would substantiate the crisis theory perspective that holds that retirement implies a loss of important social roles associated with labor market participation. Several suggestions for future research are also discussed.

Keywords: retirement; psychological well-being; gender; methodology; fixed-effect model (search for similar items in EconPapers)
JEL-codes: C21 I31 J26 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2004-09
New Economics Papers: this item is included in nep-hea
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Citations: View citations in EconPapers (6)

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