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Key Findings Details

Does Retirement Make you Happy? A Simultaneous Equations Approach
Raquel Fonseca, Arie Kapteyn, Jinkook Lee and Gema Zamarro
WP 2014-310

  • Depressive symptoms are negatively related to retirement. In other words retirement reduces the probability of depression.
  • Life satisfaction is positively related to retirement.
  • Household wealth, being married, educational attainment, are all positively related to life satisfaction and reduce the probability of depression.
  • Major health conditions increase the probability of depression and reduce life satisfaction.
  • Remarkably, income does not seem to have a significant effect on depression or life satisfaction. This is in contrast with the correlations in the raw data that show significant relations between income and depression and life satisfaction. This suggests that accounting for the endogeneity of income in equations explaining depression or life satisfaction is important.