Burnout and the Retirement Decision

Posted: 22 Feb 2008

See all articles by Nicole Maestas

Nicole Maestas

Harvard Medical School - Department of Health Care Policy

Xiaoyan Li

RAND Corporation

Date Written: October 1, 2007

Abstract

We introduce the process of psychological burnout and recovery as an explanation for the phenomenon known as unretirement. We illustrate theoretically how predictable time variation in burnout could generate retirement and subsequent re-entry in a standard retirement model. We apply this model to the longitudinal Health and Retirement Study, presenting a novel measure of burnout, the Burnout EX3 Index. The index is correlated with different types of work stressors, and its time profile discriminates among different types of retirees. For example, prior to retirement, burnout rises steeply for future unretirees then falls rapidly after retirement; whereas burnout among future partial retirees is low and changes little over time. Using a series of econometric models derived from our theoretical model, we show that as burnout rises, retirement becomes more probable, and as burnout recedes following retirement, re-entry becomes more probable. While access to public and private pension benefits increases the likelihood of retirement for all retirees, pension accruals are least important for those who will later unretire, suggesting that unretirees are more willing to trade future gains in pension wealth for leisure than other retirees. Indeed, for this group, the effect of burnout dominates that of the net return to work.

Suggested Citation

Maestas, Nicole and Li, Xiaoyan, Burnout and the Retirement Decision (October 1, 2007). Michigan Retirement Research Center Research Paper No. UM WP 2007-166. Available at SSRN: https://ssrn.com/abstract=1082054

Nicole Maestas (Contact Author)

Harvard Medical School - Department of Health Care Policy

180 Longwood Avenue
Boston, MA 02115
United States

Xiaoyan Li

RAND Corporation ( email )

1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407-2138
United States

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