Does Retirement Induced through Social Security Pension Eligibility Influence Subjective Well-being? A Cross-Country Comparison
In this paper, we examine the effect of retirement on subjective well-being within 12 countries, using panel data from the U.S. Health and Retirement Study (HRS) and the Survey of Health, Ageing, and Retirement in Europe (SHARE)3. By comparing countries with different pension entitlement ages, we evaluate the retirement effects on subjective well-being, while controlling for age, birth-cohorts, and other risk factors. Subjective well-being observed at retirement may reflect age or birth-cohort differences (Butterworth et al., 2006), and therefore, it is important to separate out retirement effects from age and cohort effects. In estimating retirement effects, we account for potential reverse causation of poor subjective well-being on retirement, using an instrumental variables approach. This exploits variations in public pension eligibility due to country and cohort specific retirement ages (early and full entitlement ages).
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