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Mental retirement and schooling

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  • Bingley, Paul
  • Martinello, Alessandro

Abstract

We assess the validity of differences in eligibility ages for early and old age pension benefits as instruments for estimating the effect of retirement on cognitive functioning. Because differences in eligibility ages across country and gender are correlated with differences in years of schooling, which affect cognitive functioning at old ages, they are invalid as instruments without controlling for schooling. We show by means of simulation and a replication study that unless the model incorporates schooling, the estimated effect of retirement is negatively biased. This explains a large part of the “mental retirement” effects which have recently been found.

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Bibliographic Info

Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 63 (2013)
Issue (Month): C ()
Pages: 292-298

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Handle: RePEc:eee:eecrev:v:63:y:2013:i:c:p:292-298

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Related research

Keywords: Cognitive ability; Retirement; Schooling; Cross-country instruments;

References

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  1. Fabrizio Mazzona & Franco Peracchi, 2010. "Ageing, cognitive abilities and retirement," EIEF Working Papers Series 1015, Einaudi Institute for Economics and Finance (EIEF), revised Jan 2012.
  2. Christelis, Dimitris & Jappelli, Tullio & Padula, Mario, 2006. "Cognitive Abilities and Portfolio Choice," CEPR Discussion Papers 5735, C.E.P.R. Discussion Papers.
  3. Bonsang Eric & Adam Stéphane & Perelman Sergio, 2010. "Does Retirement Affect Cognitive Functioning?," ROA Research Memorandum 001, Maastricht University, Research Centre for Education and the Labour Market (ROA).
  4. Flavio Cunha & James Heckman, 2007. "The Technology of Skill Formation," NBER Working Papers 12840, National Bureau of Economic Research, Inc.
  5. Anne Case & Christina Paxson & Mahnaz Islam, 2008. "Making Sense Of The Labor Market Height Premium: Evidence From The British Household Panel Survey," Working Papers 1072, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
  6. Norma B. Coe & Hans‐Martin von Gaudecker & Maarten Lindeboom & Jürgen Maurer, 2012. "The Effect Of Retirement On Cognitive Functioning," Health Economics, John Wiley & Sons, Ltd., vol. 21(8), pages 913-927, 08.
  7. Susann Rohwedder, 2009. "Mental Retirement," Working Papers 711, RAND Corporation Publications Department.
  8. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-55, March-Apr.
  9. Torberg Falch & Sofia Sandgren, 2006. "The effect of education on cognitive ability," Working Paper Series 7306, Department of Economics, Norwegian University of Science and Technology.
  10. Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, vol. 75, pages 352.
  11. James Banks & Cormac O'Dea & Zoë Oldfield, 2010. "Cognitive Function, Numeracy and Retirement Saving Trajectories," Economic Journal, Royal Economic Society, vol. 120(548), pages F381-F410, November.
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Citations

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Cited by:
  1. Bertoni, Marco & Brunello, Giorgio, 2014. "Pappa Ante Portas: The Retired Husband Syndrome in Japan," IZA Discussion Papers 8350, Institute for the Study of Labor (IZA).
  2. Kamhöfer, Daniel & Schmitz, Hendrik, 2013. "Analyzing Zero Returns to Education in Germany: Heterogeneous Effects and Skill Formation," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79910, Verein für Socialpolitik / German Economic Association.
  3. Eibich, P.;, 2014. "Understanding the effect of retirement on health using Regression Discontinuity Design," Health, Econometrics and Data Group (HEDG) Working Papers 14/10, HEDG, c/o Department of Economics, University of York.
  4. Fabrizio Mazzonna & Franco Peracchi, 2014. "Unhealthy retirement? Evidence of occupation heterogeneity," IdEP Economic Papers 1401, USI Università della Svizzera italiana.

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