Changing identity: Retiring from unemployment

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. --life satisfaction,retirement,unemployment,identity,social norm

Changing Identity: Retiring from Unemployment

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.life satisfaction, retirement, unemployment, identity, social norm

On the Misery of Losing Self-employment

German panel data is used to show that the decrease in life satisfaction caused by an increase in the probability of losing work is higher when self- employed than when paid employed. Further estimations reveal that becoming unemployed reduces self-employed workers’ satisfaction considerably more than salaried workers’ satisfaction. These results indicate that losing self- employment is an even more harmful life event than losing dependent employment. Monetary and non-monetary reasons seem to account for the difference between the two types of work. Moreover, it originates from the process of losing self-employment and the consequences of unemployment rather than from advantages of self-employment

Temporary contracts and workers' satisfaction

Fixed-term contracts are often considered a key policy tool for increasing employment. As we show that contract limitation lowers job satisfaction using data from the German Socio-Economic Panel study, we detect a drawback of promoting temporary employment that has not been identified so far. We find that the “honeymoon-hangover” effect of a new job must be taken into account to reveal this result. We examine reasons why employees suffer from temporary contracts and analyse the “Flexicurity” idea of compensating workers with security. Our findings contribute to research on workers’ well-being as well as to the debate on labour market flexibilisation

Taugt das deutsche Modell als Vorbild?

Zu den Verpflichtungen der Mitglieder im Europäischen Fiskalpakt gehört unter anderem, eine nationale Schuldenbremse einzuführen – eine Regel zur Begrenzung der jährlichen Neuverschuldung. Deutschland ist diesen Schritt bereits gegangen. Im vorliegenden Beitrag überprüfen wir, inwieweit das deutsche Modell als Vorbild für andere Staaten des Euroraums taugt. Wir hinterfragen dazu, ob es Regierungen und Parlamente im Aufnehmen von Schulden wirksam einschränkt. Besondere Aufmerksamkeit schenken wir dem Verfahren zur Konjunkturbereinigung. Auf Grundlage eigener Ex-Post-Simulationen kommen wir zu dem Ergebnis, dass es Regierungen und Parlamenten erhebliche Verschuldungsspielräume einräumt, die dem Ziel einer Schuldengrenze zuwiderlaufen. Ähnliche Zweifel an der Zielgenauigkeit der im deutschen Modell gefundenen Regelungen begründen wir im Hinblick auf die Bereinigung um finanzielle Transaktionen, Ausnahmen in Notsituationen und den Stabilitätsrat. Wir gehen ferner darauf ein, wie Staaten das Modell im Sinne eines (noch) wirksameren Mechanismus weiterentwickeln könnten

How Losing Employment Affects the Willingness to Take Risks

Using German panel data, we assess the causal effect of job loss, and thus of an extensive income shock, on risk attitude. In line with predictions of expected utility reasoning about absolute risk aversion, losing one’s job reduces the willingness to take risks. This effect strengthens in previous hourly wage, begins to manifest itself as soon as an employee perceives the threat of job loss and is of a transitory nature. The change in stated risk attitude matches observable job finding behaviour, confirming the behavioural validity of our results

Changing jobs does not necessarily bring you happiness

When people have left the previous job willingly, they're happier in the new position, but the feeling is short-lived, write Adrian Chadi and Clemens Hetschk

Income Support, (Un-)Employment and Well-Being

Using specific panel data of German welfare benefit recipients, we investigate the non-pecuniary life satisfaction effects of in-work benefits. Our empirical strategy combines difference-in-difference designs with synthetic control groups to analyze transitions of workers between unemployment, regular employment and employment accompanied by welfare receipt. Working makes people generally better off than being unemployed, but employed welfare recipients do not reach the life satisfaction level of regular employees. This implies that welfare receipt entails non-compliance with the norm to make one’s own living. Our findings allow us to draw cautious conclusions on employment subsidies paid as welfare benefits

retiring from unemployment

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

Retirement and Unemployment Scarring

Previous studies find that past unemployment reduces life satisfaction even after reemployment for non-monetary reasons (unemployment scarring). It is not clear, however, whether this scarring is only caused by employment-related factors, such as worsened working conditions, or increased future uncertainty as regards income and employment. Using German panel data, we identify non- employment-related scarring by examining the transition of unemployed people to retirement as a life event after which employment-related scarring does not matter anymore. We find evidence for non-employment-related non-monetary unemployment scarring for people who were unemployed for the first time in their life directly prior to retirement, but not for people with earlier unemployment experiences