Happy to Stay: Job Satisfaction and Retirement

We use long-run panel data to investigate the dynamic link between work and retirement in Australia and the UK. In particular, we ask whether job dissatisfaction affects future retirement decisions. The results in both countries indicate that, relative to satisfied workers, those reporting job dissatisfaction are significantly more likely to retire in the next period, although their retirement probability is not as high as those who are unemployed or not in the labour force in the current period. These large-scale panel results thus show that self-reported job satisfaction not only affects the decision to quit the job, but also the extensive margin of labour supply: the decision to leave the labour market altogether.