Working Paper: NBER ID: w9033
Authors: Kerwin Kofi Charles
Abstract: 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.
Keywords: No keywords provided
JEL Codes: I310; J140; J170; J260
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| retirement and well-being (J26) | simultaneously determined relationship (C30) |
| retirement (J26) | subjective well-being (SWB) (I31) |
| age thresholds in the social security system (H55) | retirement (J26) |
| retirement (J26) | well-being (I31) |