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Does Retirement Kill You? Evidence from Early Retirement Windows

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Author Info

  • Coe, Norma B.

    (Center for Retirement Research)

  • Lindeboom, Maarten

    ()
    (VU University Amsterdam)

Abstract

The magnitude of the effect that health has on the retirement decision has long been studied. We examine the reverse relationship, whether or not retirement has a direct impact on later-life health. In order to identify the causal relationship, we use unexpected early retirement window offers to instrument for retirement behavior. They are legally required to be unrelated to the baseline health of the individual, and are significant predictors of retirement. We find that there is no negative effect of early retirement on men's health, and if anything, a temporary increase in self-reported health and improvements in health of highly educated workers. While this is consistent with previous literature using Social Security ages as instruments, we also find some evidence that anticipation of retirement might also be important, and might bias the previous estimates towards zero.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3817.

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Length: 31 pages
Date of creation: Nov 2008
Date of revision:
Handle: RePEc:iza:izadps:dp3817

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Keywords: health; retirement; instrument; causal effect;

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  1. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
  2. Dhaval Dave & Inas Rashad & Jasmina Spasojevic, 2006. "The Effects of Retirement on Physical and Mental Health Outcomes," NBER Working Papers 12123, National Bureau of Economic Research, Inc.
  3. Charles Brown, 2003. "Early Retirement Windows," Working Papers wp064, University of Michigan, Michigan Retirement Research Center.
  4. James P. Smith, 2003. "Consequences and predictors of new health events," IFS Working Papers W03/22, Institute for Fiscal Studies.
  5. Coe, Norma B. & Zamarro, Gema, 2011. "Retirement effects on health in Europe," Journal of Health Economics, Elsevier, vol. 30(1), pages 77-86, January.
  6. Kerwin Kofi Charles, 2002. "Is Retirement Depressing?: Labor Force Inactivity and Psychological Well-Being in Later Life," NBER Working Papers 9033, National Bureau of Economic Research, Inc.
  7. Lindeboom, Maarten & Portrait, France & van den Berg, Gerard, 2002. "An econometric analysis of the mental-health effects of major events in the life of older individuals," Working Paper Series 2002:19, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  8. James P. Smith, 2005. "The Impact Of Ses On Health Over The Life-Course," Labor and Demography 0511002, EconWPA.
  9. John Bound & Timothy Waidmann, 2007. "Estimating the Health Effects of Retirements," Working Papers wp168, University of Michigan, Michigan Retirement Research Center.
  10. 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.
  11. Adams, Peter & Hurd, Michael D. & McFadden, Daniel & Merrill, Angela & Ribeiro, Tiago, 2003. "Healthy, wealthy, and wise? Tests for direct causal paths between health and socioeconomic status," Journal of Econometrics, Elsevier, vol. 112(1), pages 3-56, January.
  12. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
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