Changing Identity: Retiring from Unemployment

31 Pages Posted: 23 Sep 2011  

Clemens Hetschko

Free University of Berlin (FUB)

Andreas Knabe

University of Magdeburg - Institute of Economics and Business Administration; CESifo (Center for Economic Studies and Ifo Institute)

Ronnie Schöb

affiliation not provided to SSRN

Multiple version iconThere are 3 versions of this paper

Date Written: September 1, 2011

Abstract

Using data from the German Socio-Economic Panel from 1984-2009, we follow persons from their working life into their retirement years and find that, on average, employed people maintain their life satisfaction upon retirement, while long-term unemployed people report a substantial increase in their life satisfaction when they retire. These results are robust to controlling for changes in other life circumstances and suggest that retiring is associated with a switch in the relevant social norms that causes an increase in identity utility for the formerly unemployed. This is supportive of the idea that, by including identity in the utility function, results from the empirical life satisfaction literature can be reconciled with the economic theory of individual utility.

Keywords: life satisfaction, retirement, unemployment, identity, social norm

JEL Classification: I31, J26

Suggested Citation

Hetschko, Clemens and Knabe, Andreas and Schöb, Ronnie, Changing Identity: Retiring from Unemployment (September 1, 2011). Available at SSRN: https://ssrn.com/abstract=1932596 or http://dx.doi.org/10.2139/ssrn.1932596

Clemens Hetschko (Contact Author)

Free University of Berlin (FUB) ( email )

Kaiserswerther Str. 16-18
Berlin, Berlin 14195
Germany

Andreas Knabe

University of Magdeburg - Institute of Economics and Business Administration ( email )

Universitaetsplatz 2
Magdeburg, 39016
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Ronnie Schöb

affiliation not provided to SSRN

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