Does Retirement Affect Cognitive Functioning?

Abstract

This paper analyses the effect of retirement on cognitive functioning using a longitudinal survey among older Americans, which allows controlling for individual heterogeneity and endogeneity of the retirement decision by using the eligibility age for social security as an instrument. The results highlight a significant negative effect of retirement on cognitive functioning. Our findings suggest that reforms aimed at promoting labour force participation at an older age may not only ensure the sustainability of social security systems but may also create positive health externalities for older individuals.

Understanding the effect of retirement on health: Mechanisms and heterogeneity

“…2 Similarly, studies focusing on health-related outcomes come to conflicting conclusions. Rohwedder and Willis (2010), Mazzonna and Peracchi (2012), Bonsang et al (2013) and Bingley and Martinello (2013) all find that retirement leads to a decrease in cognitive functions. Kuhn et al (2010) report increased mortality upon retirement.…”

The effects of increasing the normal retirement age on health care utilization and mortality

“…The most frequently used instrument is age-specific retirement incentives, such as early retirement windows or eligibility age thresholds. This strategy has been used both in cross-country studies (e.g., Rohwedder et al 2010;Sahlgren 2012;Heller-Sahlgren 2017;Mazzona andPeracchi 2012, 2017;Coe and Zamarro 2011;Godard 2016) and in within-country studies (e.g., Charles 2004; Bound and Waidmann 2007;Neuman 2008;Bonsang et al 2012;Gorry et al 2015;Behncke 2012). The identifying assumption is that the instruments affect health only indirectly through their effects on the age of retirement.…”

Older People's Mobility: Segments, Factors, Trends

“…Health has an effect on retirement (see for example Deschryvere, 2005) and retirement may have an impact on health and consequently travel patterns. However, recent findings on the impact of retirement on cognitive function and health have been contradictory (Bingley & Martinello, 2013;Bonsang, Adam, & Perelman, 2012;Mazzonna & Peracchi, 2012;Rohwedder & Willis, 2010).…”