Does the Road to Happiness Depend on the Retirement Decision? Evidence from Italy

Abstract

Retirement is a fundamental decision in the life-cycle of a person. For this reason many studies try to assess the effect of retirement on outcomes such as consumption, health, and well-being. Due to Italy's aging population, a trend which started in the second half of the twentieth century, it is fundamental to understand the effect of retirement on mental health and well-being. Charles (2004), among others, focuses on the effect of retirement in the United States (US), finding a positive effect of retirement on well-being. Using Canadian data, Gall et al. (1997) provide some empirical evidence in support of the theory first proposed by Atchley (1976), in which there is a positive short-term effect of retirement (defined as the honeymoon period) on well-being, but a negative mid-to long-term effect. Heller-Sahlgren (2017) identifies the short-term and longer-term effects of retirement on mental health across Europe. He shows that there is no effect in the short term, but that there is a strong negative effect in the long term. Bonsang and Klein (2012), Hershey and Henkens (2013), in Germany and in the Netherlands, respectively, try to disentangle the effects of voluntary retirement compared with those of involuntary retirement, finding that involuntary retirement has strong negative effects that are absent in the case of voluntary retirement. Börsch-Supan and Jürges (2006) analyze the German Opinions expressed herein are those of the authors only. They do not necessarily reflect the views of, or involve any responsibility for, the institutions with which they are affiliated. Any errors are the fault of the authors.