published in: Economic Journal, 2024, 134, 1465–1493
We use nationally representative panel data from Australia to consider the impact of retirement on individual locus of control, a socio-emotional skill that has substantial explanatory power for a broad range of life outcomes. We establish causality via cohort-specific eligibility age for the Australian Age Pension. We show that retirement leads to increased internal locus of control. This greater sense of internal control can explain around one-third and one-fifth of the positive effects of retirement on health and subjective well-being, respectively. The impact of retirement on control beliefs varies along the distribution of locus of control, with the positive influence being most pronounced for men with a relatively high sense of internal control and for women with a relatively high sense of external control. Last, we provide evidence that locus of control is much more malleable at retirement than the other socio-emotional skills of the Big-Five personality traits, risk and time preferences, and trust.
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