Institutional Affiliation: Rand Corporation
NBER Working Papers and Publications
|June 2015||Does Retirement Make You Happy? A Simultaneous Equations Approach|
with Raquel Fonseca, Arie Kapteyn, Gema Zamarro
in Insights in the Economics of Aging, David A. Wise, editor
Continued improvements in life expectancy and fiscal insolvency of public pensions have led to increased pension entitlement ages in several countries, but its consequences for subjective well-being are largely unknown.
Financial consequences of retirement complicate the estimation of effects of retirement on well-being as financial circumstances may influence well-being, so the effects of retirement may be confounded by income changes. Also, unobservable determinants of income are probably related with unobservable determinants of well-being, making income possibly endogenous if used as control in well-being regressions. To address these issues, we estimate a simultaneous model of retirement, income, and subjective well-being while accounting for time effects and unobserved individual eff...