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Occupational Retirement and Pension Reform: The Roles of Physical and Cognitive Health

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  • Jiayi Wen

Abstract

Despite increasing cognitive demands of jobs, knowledge about the role of health in retirement has centered on its physical dimensions. This paper estimates a dynamic programming model of retirement that incorporates multiple health dimensions, allowing differential effects on labor supply across occupations. Results show that the effect of cognitive health surges exponentially after age 65, and it explains a notable share of employment declines in cognitively demanding occupations. Under pension reforms, physical constraint mainly impedes manual workers from delaying retirement, whereas cognitive constraint dampens the response of clerical and professional workers. Multidimensional health thus unevenly exacerbate welfare losses across occupations.

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  • Jiayi Wen, 2023. "Occupational Retirement and Pension Reform: The Roles of Physical and Cognitive Health," Papers 2308.13153, arXiv.org.
    • Handle: RePEc:arx:papers:2308.13153
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    Cited by:

    1. Siqi Wei, 2022. "Income, Employment and Health Risks of Older Workers," Working Papers wp2022_2205, CEMFI.

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    More about this item

    JEL classification:

    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • I10 - Health, Education, and Welfare - - Health - - - General
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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